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.