How to save for your first home

Published on
3 June 2021
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Saving to buy your first home can feel daunting, but having a realistic plan makes it a lot more manageable! Your deposit is the biggest thing you’ll be saving for, but having a little bit extra will come in handy for those additional moving costs, such as valuation or conveyancing fees.

I’d love to buy my own home but I don’t know where to start…

Before you pack up all of your worldly belongings, you’re going to have to think about saving money for a deposit on your first home.

A deposit? How much will I need?

That all depends on how big a mortgage you're looking for. Be sure you can afford it - home ownership is something to aspire to but it does take a big financial commitment.

You can also be thankful if you live in the north of England rather than London. Average house prices here mean a first-time buyer would need a 5% deposit of between £5,500 and £7,000 compared with £21-£24,000 in the capital.

Find out more about our 5% deposit mortgages here.

Painting in a first time buyers home

Phew. There's a lot to be said for Cumbria. Okay, I've got a figure in mind - now what?

You need to set a budget of how much you can set aside each month and a timeline for how long you want to save for. For example, could you save everything you need for a house deposit in a year? It’s a long time but gives you a clear goal and a focus for your plans.

Ah, the S word - saving. I'm going to be housebound for a year, aren't I?

Not necessarily. You can save for a house and still have a social life. You can even make it work to your overall financial benefit. Here are some questions to consider:

  • Are you paying too much for your phone contract?
  • Can you reduce your utility bills or switch them to make a saving?
  • Is it time to cancel that gym membership you never use? Are there any other unused subscriptions you can get rid of?
  • Is earning more money an option, either from your current job or a second one?
  • Do you really need that takeaway coffee on your way to work every day?
  • If you're renting, can you move to a cheaper place, sublet a room or even move back in with your parents for a while?
  • Can the Bank of Mum & Dad help out?

Redecorating in a first time buyer's home

It looks like I can definitely start saving for my first home right away. So where do I put my savings?

A regular savings account is probably the best option. In particular you'll want to explore Lifetime ISAs, specifically aimed at the first-time buyer. You have to be under 40 to open one. This ISA lets you save up to £4,000 every tax year, with the government adding a 25% bonus. Plus you earn interest which is tax-free.

A top tip is to set up a monthly standing order to pay into your savings account so you learn to treat it as another bill.

Sounds good. I'll open one tomorrow, cancel my gym membership and sell a few CDs on eBay… That everything?

Pretty much. But as we’ve mentioned, saving for your first home deposit does take time.

Bear in mind there will be other costs on top of your deposit - mortgage fees, survey fees, lawyers' fees and stamp duty for starters.

I’ll try and be patient. But it’s really exciting to know how to save for a deposit and actually get started… Any other tips?

Keep an eye on house prices in your area. And don't be afraid to seek professional help from a mortgage advisor or other financial expert. We’re here if you have any queries or you’d like to book an appointment. Or feel free to check out our article on questions every first time buyer should ask.

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