How to Save for Your First Home Whilst Paying Rent

Buying our first home is something that many of us dream of – it’s about gaining independence, freedom, and the ability to live where and how you want to.

But, for first time buyers, it can sometimes feel impossible. After all, if you’re currently living in rented accommodation, how can you also save up enough money to cover a deposit for your own home, never mind the rest of the costs?

The good news is, it is possible to save up a deposit whilst you’re living in rented accommodation – it just takes some carefully planning and budgeting.

Here’s our guide to overcoming these challenges and to saving for your first property whilst renting.

Tips for saving for a house whilst renting

Understand the costs

The first step to saving to buy a house is to have a realistic idea of how much money you need to save. There are a number of costs involved in buying your first property, including the initial costs related to the purchase plus the ongoing fees associated to property ownership – some of these can be seen below:

The cost of buying a new house:

  • Deposit
  • Mortgage
  • Stamp Duty
  • Surveyor Fees
  • Conveyancing Fees

The ongoing costs of home ownership:

  • Removal Fees
  • New Furniture
  • Home Insurance
  • Utility Bills
  • Council Tax

It’s always advisable to look into all of these costs to gain a good understanding of how much you’ll need to save whilst you’re still renting.

Set goals

Did you know that if you have a savings goal, it could help you save up to £550 more a year?

Set yourself both long and short-term goals, ensuring that they are realistic. This will not only spur you on to save, but it should also help you to calculate how long it will take to save for your first home.

Work out a budget

Once you’ve identified your savings goals, you need to figure out how you can achieve them – and that means budgeting. Putting together a budget will allow you to see exactly how much money you have coming in each month, how much you spend each month, how much you should have left over, and where you can make savings.

Of course, once you’ve worked out and balanced your budget, you’ll need to stick to it! Budgeting for small treats along the way should help you to stick to your budget in the long term.

Find the right savings plan

There is a wide range of savings plans available. If you’re looking to save for a house, it’s important that you understand the various products available and select the best one for you.

Different savings plans have different features, so you’ll need to think about factors such as how regularly you want to make payments into your savings, how much you want to save, how quickly you want to be able to withdraw your money, and whether or not you have a lump sum to invest.

Designed specifically to meet the needs of those who are trying to save for their first home, a Lifetime ISA is definitely worth considering when you’re trying to get your foot on the property ladder. Introduced in April 2017, the LISA is a savings account that allows those between the ages of 18-39 to save up to £4,000 a year towards their first home or for retirement, plus it has a 25% bonus from the government each year.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.

Saving for the future: Foresters Friendly Lifetime ISA Video

Saving for your future with a Lifetime ISA

At Foresters Friendly Society we understand how daunting it can be looking towards your future with any level of certainty.

Whether it is furthering your education, buying your first home, starting a family, or planning for your retirement, there’s a lot to consider and we want to help you by providing simple financial options to support your goals.

Whilst nobody can predict the future, you can certainly start to prepare for it, and that’s where the Foresters Friendly Society Lifetime ISA can help you save for your first home or your retirement.

Want to know more about the benefits of Lifetime ISAs and tax-free savings? Take a look at our short video above.

Video Transcription

You can never quite see into the future.

How do you know which path you’ll follow? Which doors you’ll open? Or how things will turn out?

What you do know is that rent and house prices are high, making it difficult to get on the property ladder.

And maybe you haven’t even thought about it yet, but you should be thinking about the cost of retirement too. You’re going to live longer and the state pension might not be enough to get by on.

Whether you’re dreaming of buying your first home or you’d like to enjoy a comfortable retirement, you know you’re going to need plenty of this …

And while you can’t predict the future, you can prepare for it.

To help you do that, the Government’s created a new tax-free savings account. You can use it to save towards a house deposit or savings for your retirement. It’s called a Lifetime ISA (or LISA).

If you’re between 18 and 39 you can open a LISA.

And you can save up to £4,000 a year, until you are 50.

What’s so special about a LISA?

  • When you save money in a LISA you don’t have to pay tax on the returns you get.

Tax rules may change and depend on individual circumstances.

  • The government will boost your savings by adding an extra 25% every year – so you could get up to £1,000 extra a year.
  • So, for every four pounds you save in a LISA, the government gives you an extra £1 for nothing. What’s not to like?

Designed for people who want to save for the medium to long term, typically five years or more.

The Foresters Stocks & Shares LISA aims to help your investment grow steadily while protecting it from the ups and downs of the stock market.

Please be aware that in some investment conditions, you may not get back the full amount originally invested in a Stocks and Shares ISA

All this adds up to help you get the home, retirement and the life you want.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.