How To Save Enough To Buy Your First Home – 5 Things To Consider

Purchasing a house is one of the largest financial transactions that will take place in your lifetime. House purchases are not cheap, and you will need to work hard to save the money in order to buy your first home. That is because, even with a mortgage, you will still need to give a substantial amount in the form of a down payment. Saving this down payment can be incredibly difficult. 

In this guide, we’re here to help you. We’ll be taking a look at how to save enough to buy your first home, and 5 different things to consider that will help you on your way. Keep on reading to find out more!

How Much Do You Need to Save to Buy a First Home? 

First things first, let’s take a look at how much money you will typically need to save to buy a first home. Well, ultimately the amount that you will need to save will depend on where you are buying. Across the globe, house prices vary greatly, and these prices fluctuate not only from country to country, but from area to area too. 

House prices are impacted by a huge number of factors, from the number of bedrooms, the size of the garden, and even the schools in the district. But no matter how much you pay for your house, you will generally need to save about 25% of the value of the property as a down-payment. 

Of course, 25% of the value will vary greatly depending on the value of the property itself. So to calculate an exact figure of how much you need to save, you should calculate around 25% of the household cost average for the area where you want to buy. If you end up saving more than you actually need, you can easily use this to do work on the house once you purchase it. 

5 Things to Consider:

Saving 25% of the value of the house that you want to buy can be a large task. To help you save enough money to purchase your first home, here are five things to consider that could help you on your way.

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1. Reduce Your Outgoing Payments

One of the biggest things that will prevent you from saving money is your monthly outgoing payments. Monthly outgoing payments can be a real killer, and it is really easy to get bogged down when you are paying for things monthly via credit. So, to help you save enough money to buy your first home, you should try to reduce your outgoing payments.

There will be some monthly outgoing payments that are simply unavoidable, such as rent, utilities for your rental, mobile phone contracts, etc. But there are some outgoing payments that you can stop to try to reduce your monthly outgoings. Things such as Netflix, Disney+, or a craft beer subscription are “wants” not “needs, and going without these things for a small period can really help you save money.

2. Ask Yourself If You “Need” Something

Following on from our last point, a good way to save money is to ask yourself whether, or not, you “need” something, or if you simply “want” something. Wants are often things that will pass in time, so try to avoid impulse purchases in order to save money for your home. 

When you need to save a large amount of money, it can take a considerable amount of time, and this can make it easy to lose sight of the end goal. Ask yourself if you really “need” something before you purchase it to avoid spending money that could’ve gone towards your house.

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3. Create a Savings Plan

As the old saying goes, “Fail to prepare, prepare to fail”, and the same applies to saving for your first house. If you haven’t got a savings plan, you will likely find yourself throwing money into a savings account, constantly losing track of how much money you have saved, and dipping into it when you are low on cash in a calendar month. 

Creating a savings plan based around your incoming money and outgoing payments will allow you to create a realistic savings goal. You will be able to calculate how much money you can realistically save in a month, and this will allow you to calculate how long it will take you to reach your goal. Planning is one of the best ways to actually achieve your savings goal for your first home. 

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4. Be Realistic in Your Property Search

This next one isn’t necessarily about saving, but it really can help you save enough money to purchase your first home. You probably have a dream house, a house with multiple bedrooms in your dream location with a huge garden, and a house that probably comes with a huge price tag. 

Your dream house isn’t realistically going to be your first property. Instead, you should reduce your expectations and purchase a house within your means. It might be smaller than you want, outside your desired neighborhood, or need work doing to it. But, buying a smaller, cheaper first house can really increase your chances of purchasing your dream home further down the line. 

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5. Ask Family for Support

Finally, if you are really struggling to save money for the deposit on your first home, it is worth speaking to your family. Your family only wants what’s best for you, and often they will be willing to help you out if you really need it. 

Many people borrow money from their family for their home’s down payment and then re-pay this money to their loved ones. If you have this option available to you, it is worth using it as it can be a massive help with getting on the property ladder.

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Summary

In short, saving enough money to buy your first home is by no means easy. You will need to put down around 25% of the home’s value and this can be a lot of money. Check out this guide for things to consider that will help you save enough money to buy your first home. 

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Thank you for reading!