Strategies For Saving For Your First Home While Renting

Embarking on the journey to homeownership can be both thrilling and challenging, especially when balancing the demands of renting. If you’re considering stepping into the property market for the first time in the coming year, then it’s never too early to start planning and saving for your dream home. Below, in this guide, we’ve written about how you can effectively save for your first home while managing your rental costs. Keep reading to learn more.

Set a Realistic Deposit Goal

Start by determining a realistic savings target. Typically, you’ll need 5-10% of your desired property’s value for a deposit. For instance, for a £200,000 home, you should aim to save between £10,000 and £20,000. This initial goal helps in creating a focused savings plan and gives you an accurate idea of how much you need to save.

Create an Effective Budget Plan

When you’re thinking about buying your first home, adopt a 50:30:20 budgeting strategy, where you allocate 50% of your income to essentials like rent and bills, 30% to discretionary spending, and 20% to savings. This plan can be adjusted based on your personal circumstances, and it offers a structured approach to building your deposit over time. 

Use Budgeting Apps for Financial Management

Another strategy to consider is using a budgeting app to gain a clearer understanding of your finances. Popular apps can link to your bank and credit accounts, providing an overview of your financial habits and helping you manage your budget more effectively. These apps should give you a clearer picture of your financial situation, helping you to make more informed decisions. 

Conduct a Bank Account Audit

In addition, take time to scrutinise your bank statements for forgotten or unnecessary expenses, such as unused subscriptions or memberships. Eliminating these small, recurring costs can lead to significant savings over time.

Explore First-Time Buyer Schemes

For first-time buyers, there are a number of different schemes that you can take advantage of including; 

• Shared Ownership

This government-backed scheme allows you to buy a portion (between 25% and 75%) of a new-build home and pay rent on the remaining share. It’s an excellent way to reduce the mortgage amount needed and ease into homeownership.

• First Homes Scheme

Available in England, this scheme offers first-time buyers homes at a discounted price. Eligibility includes being over 18, buying your first home, and securing a mortgage for at least half the home’s price. Property price caps apply depending on the location.

Step-by-Step Guide to Saving for Your First Home

Want to start saving money for your first property? Remember these additional tips;

• Record Your Expenses; Start by tracking all your expenses for a couple of months. Include everything from rent and utilities to small daily purchases. This exercise will give you a clear picture of your spending habits.

• Create a Budget; With a better understanding of your monthly outgoings, identify areas where you can cut back. Aim to start with manageable savings targets, gradually increasing them over time.

• Prioritise Savings; After receiving your salary, immediately transfer the predetermined savings amount to your savings account. This helps avoid the temptation to dip into your savings.

• Make Your Savings Work Harder; Consider putting your savings into accounts with higher interest rates, like a Lifetime ISA (LISA), to maximise your returns.

• Identify and Cut Non-Essentials; Evaluate your spending on non-essential items. Opting for cost-effective choices, like cooking at home instead of dining out, can boost your savings without significantly impacting your lifestyle.

• Set a Clear Savings Goal; Having a tangible goal keeps you motivated and provides a sense of achievement as you reach each milestone.

Looking for Houses for Sale in Sheering?

At Wright & Co, we are the premier estate agent in Hertfordshire and Essex, offering unparalleled services in buying, selling, renting, and property management. With a dedicated team boasting over 110 years of combined experience, we provide professional valuations backed by thorough research. 

Our extensive local knowledge covers Sawbridgeworth and surrounding areas, ensuring insightful advice on schools, parks, transport links, and more. As an independent agency, we prioritise customer interests, leveraging our agility for customer-first decision-making. Whether you seek your dream home or aim to sell or let a property, we deliver a safe, accessible, and customer-focused experience. Any questions? Contact us on 01279 600400 or email us at info@wright-co.co.uk.

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