Working to get your foot on the property ladder in Solihull is no easy task, but with a market that has seen a slow down, now could be the perfect time to buy your first home. There’s a lot to consider, like which area to choose and what type of property to buy, but above all else, your budget should be your top consideration. The last thing you want to do is to purchase something beyond your means and end up in a financial crisis.
If you’ve seriously started considering buying your first property, you should also be considering how you can afford it, so here are the best six budget planning tips for first-time buyers from DM & Co. .
1. Stop renting
Paying rent every month is almost equal to paying monthly mortgage fees except you’re not gaining anything! It can be especially difficult to save a deposit for your new home if you’re paying so much each month in rent. If you are willing to give up your own space for roughly six to 12 months whilst you save your money, you are then likely to have enough for a deposit and be a homeowner much sooner than if you were trying to save money and pay rent. Moving back home with family may sound like a last resort, but you will be able to save a lot more.
If moving in with family is not an option and you must rent, there are ways to work around this so you can still pocket some money for a deposit. You can always find a cheaper place to live, but bear in mind that this may mean a smaller property. You could also consider opting for a house share rather than renting a property of your own to help lower the cost of your rent, giving you extra money to put away for a deposit.
2. Put your savings to work
Why have money just sitting in an account when you could be earning money on that savings? If you have a decent interest rate, you can reach your savings goal faster, but picking the right account is dependent on how you’re saving. If you have money to put aside each month and want to set up regular payments, a regular savings account might be your best bet. If you need more flexibility with the amount you put away, for example, if you save in lump sums whenever you can rather than on a fixed schedule, an instant access savings account might be the better option for you.
3. Research areas and locations
As a first time buyer, deciding where to buy your first home is just as important as saving for your deposit. If you haven’t picked the area you want to purchase your new home in yet, do some research to find out what you can afford and if the area fits your lifestyle and needs. You can speak to our expert team here at DM & Co. to help guide your choice, but ultimately you will need to determine which areas are good for your budget before anything else. Be sure to check out what the prices are for the type of property you want to buy, as well as council taxes and any other costs that need to be factored in such as travel or parking fees for example. Once you have an idea of what the cost of your property will be, both when purchasing and when actually living there, you can start to properly budget to save for a specific goal.
4. Budget for your monthly mortgage payments
Getting a mortgage means you will be required to pay a monthly amount to your lender to cover the amount you have borrowed, so it’s vital you speak to a lender or financial adviser to ensure affordability. Here at DM & Co. we will be delighted to assist or recommend a financial services professional – simply ask us for details.
5. Budget for other home-buying costs
There are more costs to consider once you’ve bought your home, so you should make sure your budgeting plan includes enough to take care of these after you’ve completed on your first property. You don’t want to end up in a situation where you’re strapped for cash and are barely making your mortgage payments. These other costs can include:
- Solicitor fees
- Survey costs
- Mortgage arrangement costs
- Estate agent fees
- Buildings and contents insurance
- Furniture and decorating requirements
- Necessary renovations or maintenance
6. Take advantage of the Help to Buy scheme
The government offers a Help to Buy equity loan scheme to first time buyers in England on properties that are new builds worth up to £600,000. It’s great for first time buyers who only have a 5% deposit saved up because it gives you an equity loan that can be used towards purchasing a house on a repayment basis, rather than on an interest only basis. The repayment plan is interest-free for five years, giving you time to save more money. You can apply if you’re over the age of 18, and the equity loan you receive depends on where you live, so do check with your lender for more information.
We hope you find these six first time buyer budgeting tips helpful. For further no-obligation expert advice please contact the team at DM & Co. on 01564 777314 and we will be delighted to assist you.