How to Save for Your First Property- A Guide to Cutting Costs and Saving Money as a First-Time Buyer
House prices are ever-rising in the UK. Unfortunately, these rising prices are not being met with salary increases. As an example, the average age of a first-time buyer is 34 years old. This has risen from 2011, when the average age was 29 years old.
Why is this the case? Because many people (unless they have a generous family member) cannot afford to buy property. A dilemma we will dive deeper into later in this article.
But we are not here to be the heralds of doom! No, this blog exists to help you get on the property ladder faster, regardless of your current income, the house prices in your area or whether you have a rich family member!
This is our guide on what you can do to increase your income, save more money and fast-track your way to becoming a homeowner.
How Much Money Do I Need to Save to Buy a House?
The average house price in the UK was £285,000 as of 2023. Don’t be too disheartened, that figure is taking into account the big London price tags, which inflates this figure substantially.
So, for this demonstration, let’s go for a more rounded number. Something that will get you a decent-sized property in most places within the UK. Let’s say you’re saving for a house that costs £180,000.
Providing you’re saving for a 10% deposit, which is the average, you’ll need £18,000 in the bank just to secure your mortgage. This deposit is the main thing that first-time buyers focus on, however, there are a few other costs you need to be aware of, lest they trip you up later down the line.
Conveyancing fees: Also known as legal fees, can cost anywhere between £500 to just over £2,000, so get a few quotes from solicitors before engaging one.
Stamp Duty: As a first-time buyer, you’re exempt from Stamp Duty, unless the property costs more than £425,000. Stamp duty can typically be 5-12% of the purchase price, so this is a hefty price tag to have removed!
Survey costs: These can cost around £600, depending on the property size and conditions. A survey is taken to ensure the property is in a good, liveable state, and there are no unexpected problems, like woodworm or structural issues.
Valuation fees: You may need to pay for a professional valuation of your property. However, it’s worth noting that some banks include this for free, so check with a mortgage broker (or at least multiple lenders) before proceeding with a finance product.
Refurbishment: If you buy a property that needs some love, then account for this in your costs. If it’s more work than simply laying new carpets and adding a lick of paint, then it’s worth bringing a builder with you to view the property so you can get an accurate quote.
If a property is in poor condition, then the likelihood is you can buy it for a discount, so it’s swings and roundabouts. Regardless, be careful to note that if a property needs too much work, it might not be mortgageable.
Furnishing: It’s unlikely you’re going to want to spend the first month in your new home sitting on the floor or sleeping in a sleeping bag. It sounds simple, but many people forget to account for the cost of furniture. Create a full itinerary of what your new home will need, including the small stuff, like towel rails, and price accordingly.
There are a few other niggling costs that may arise, like paying a ‘man with a van’ to move your new furniture in or paying for mortgage arrangement fees, so always set a little bit of cash aside to account for unexpected expenses.
Now you know what you need to prepare for, here’s how to get the money in place to pay for it!
How to Save for a House- Cut Costs
There are two ways to save for a property. There’s the ‘fast track’, and there’s the ‘normal track’ (or slow track, if you prefer).
What’s the difference between the two? In a word, lifestyle. If you want to speed up your journey to homeownership, then the way to do this is by living a limited lifestyle. That means making sacrifices. It means living by a spreadsheet, carefully tracking each expenditure.
Below is a short list of some of the costs you can cut so that you’ll have more money to squirrel away at the end of each month.
Weekend habits: Keep an eye on those weekend expenses. If you’re going out with friends and family, then maybe choose to eat at home, and only get water or soft drinks when you’re out. If you do want to share a few drinks with friends, then get some beverages from your shop and have them at someone’s house. It’s cheaper than going out, and it lets you keep your social life.
Don’t buy branded: Brand loyalty must be left at the door when you’re house hunting, even when it comes to your favourite packet of crisps or chocolate.
It’s heartbreaking to hear, but one of the easiest costs to cut are those brands that cost a few extra pounds in your local shop. Supermarket brands are cheaper, and after a few weeks, you won’t even be able to tell the difference. This is as true for clothing and other items as it is for food.
Shop around: You must carefully analyse each cost, looking for alternatives where possible. This is especially true when food shopping. At least for a little while, you might have to ditch your favourite supermarket in exchange for a discount superstore.
Rather than shopping at one place, you might need to go to two or three supermarkets depending on which store sells items cheaper. Everything from the cheapest petrol, station to the corner store that sells milk for the lowest price should be noted.
Downsize: If you’re renting, then is it possible to move back into your parent’s house or downsize to a smaller property? If you can suck up a lifestyle change, then this can save you hundreds of pounds a month.
Don’t just downsize where you live: downsize your whole lifestyle. If you can sell your current car and get an old runaround that can do an entire lap of England before running out of petrol, only to need £50 to fill it back up, then that’s an easy win. Likewise, if you and your partner have a car each, then is it possible to sell one and share the other?
Public Transport: Bus and train lines have a variety of discount cards for different age ranges and job descriptions. For example, health workers sometimes get more money off their tickets, and certain age brackets get 1/3rd off the full price. We highly recommend looking at discount cards to see if any apply to you.
If you drive to work, then check if using public transport would be cheaper, or if possible, walk or cycle. If this isn’t an option, then check with team members and see if you can carpool to save some cash.
How to Save for a House: Increase Your Income
So now you’re on the track to keep those precious pennies safe, it’s time that you started multiplying them!
Looking for a new job with a pay increase looks like the first and most obvious choice. Whilst this is true, you do need to account for job security. A lender wants to see a few regular pay cheques before they decide to sign off your mortgage, so sometimes jumping straight into a new role before submitting your mortgage application can have unexpected negative effects.
If you don’t want to move jobs, then have an open and honest conversation with your manager. If they know you have a reason for asking for a pay increase, they might be more receptive. Perhaps you can agree to some set parameters that, if hit, entitle you to a pay rise.
Some businesses offer overtime schemes where employees are paid for working more hours/ covering additional shifts. This is a great way of increasing your monthly income and moving towards your savings goal faster. Ask your manager if this opportunity is open to you within your organisation.
Finally, you may have a skill set that you can monetise, even if it’s for a small amount. For example, if you’re good at design, then some local businesses will surely be happy to pay you to design the occasional poster or social media post.
Other skills, like writing, proofreading, web design, video editing and personal assistance services are all in high demand. With sites like Fiverr, Upwork and People Per Hour, setting up an account, showcasing your work and picking up a few freelance jobs has never been easier.
This does not mean you need to set up a business, but putting in some extra hours outside of work could earn you a few extra hundred pounds per month (or more).
How to Save for a House- Make it Affordable
If you’re buying your first house, then it can be easy to shoot for the stars, go for your dream property straight away, or look in areas that come with a higher price tag.
Analyse what it is that you need from your home, not just what you want. If you’re not planning on having children for another 5+ years, then you can find lower-cost housing by moving outside of catchment zones for popular schools, and by looking at properties with fewer bedrooms. You can always move again when you’re ready.
The chances are that when you go to sell your property in 3-5 years, house prices will have risen, meaning there is the possibility of selling your property for more money than you bought it for. You might also be on a higher salary in the future, which opens your door to larger mortgages. Remember, they call it the ‘property ladder’. Your first house is simply the first rung. If you don’t have the budget, then don’t shoot for the top straight away.
Cut Costs By Getting a ‘Doer Upper’.
A popular strategy for buying houses in prestigious areas that would otherwise be unaffordable (or to just buy any house for a juicy discount) is to purchase a property that needs some work.
Okay, it’s going to cost money to renovate, but providing the property is not in an awful condition, you can always do the needed work upfront, move in and then refurbish the rest when your bank account refuels.
For example, let’s say you buy a 3-bed terrace house in your dream area. It’s not in the best condition and needs a fresh coat of paint throughout and new carpets. In addition, it only has a shower and no bath, and the kitchen isn’t to your taste, but it’s functional.
You could buy this property for a discount, explaining to the estate agent that it needs this work. You can easily get the carpets replaced the week you move in and then do the painting and decorating yourself.
After putting some money aside, you can install a bath/shower combination and eventually get around to installing a new kitchen. Okay, your new home isn’t perfect right away, but you have bought yourself something affordable and now no longer have to rent or live with family/friends.
Not only does this allow you to buy a property for a lower cost and add value to it, which you will benefit from when you eventually sell, but it also allows you to add your personal touch to your home. It’s a rewarding feeling knowing that your beautiful new property is one that’s been transformed by your own hands.
Intanest- The Home of Property
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