The property ladder is an unforgiving thing, as the rungs seem to lift higher and higher just as first-time buyers move to ascend them. Between high mortgage rates and ballooned property values, it is undeniably hard to buy a first home. How, though, can first-time buyers address their finances to improve prospects?
Establish Your Goal
In order to be effective in saving for a first property, you first need to know exactly how much you intend to save up. This is a two-pronged endeavour. First, you’ll need to take a comprehensive look at your own finances, to find out how much you can afford to save – and, crucially, how much you could reasonably pay towards a mortgage each month. There are calculators out there that can help you see what a mortgage lender would be more likely to agree to here.
Doing this will give you a clear idea of the price range in which you should be looking – and, hence, a place to start with house-hunting. In narrowing down your search pool with ideal wants and needs, from bedroom and bathroom count to proximity to transport, you can settle on a tight range of prices. With this, you can figure out just how much you’ll need for your deposit and ancillary costs.
Reduce Expenses
Now you have a clear financial goal in place, you can start taking active steps to achieve it. While you might already be in a position to save a pre-set amount each month, maximising that figure is key to accelerating the process. This means cutting back on expenses where you can.
On the lighter side of things, you might re-evaluate your usage of certain subscriptions, e.g.: for your gym, or for certain streaming services. On the much heavier end of the spectrum, you might consider reducing your outgoing costs as much as possible by moving back in with your family.
Save Shrewdly
All the money you are saving needs to be held somewhere. Opening the right kind of savings vehicle can be vital for the integrity of your savings, and can even dramatically increase your spending power – which could reduce your mortgage payments or potentially allow you to look for more expensive homes. ISAs are a powerful way to maximise interest earnings, and LISAs are particularly powerful for first-time buyers, thanks to the 25% annual uplift on up to £4000.
Seek Help
Finally, it is important to acknowledge that the property market is no kinder to first-time buyers than it has been for the past twenty years – and that even with all the above tips, you might find it hard to buy yourself onto the property ladder. Recent statistics are illustrating that more and more first-time buyers rely on family for subsidy, which may well become true for you too.
