I'm a finance expert and here's what you need to do to buy your first home

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Your Money Nouvelles

The Budget,Property,Business News

Saving the deposit for your first home is within the reach of many and with the steps shared in this article, you’ll be in a better position in no time

Deciding to buy your first home is exciting. Saving the deposit less so. The cost of buying a property has risen, and the cost of running it…..well you can make a decent guess at how that's panning out.

That’s enough of the negative chat for one article. If we plan for it and take action, daily, there are many ways to help you get on the property ladder quicker and easier. Back in 2007, 100% mortgages were popular and worked well at helping people get on the property ladder, but as house prices fell over the next few years, many people were trapped in negative equity homes. Some still are.

Usually, mortgage borrowing limits are 3-4.5x your annual income, but this does vary by lender, so double-check with an independent mortgage advisor to confirm how much you can borrow. Assuming you earn £30,000 a year and can get a mortgage of 4.5 times this amount, you could borrow up to £135,000. Setting a budget Right now, you will rightly assume that saving for your deposit is the most important factor. When you eventually buy the home, this flips as you’ll have significant running costs that need to be considered now to ensure you can afford them when needed.

However, the process is the same. Live like you own the home now and put any surplus money from your current budget into your deposit savings.Budgeting sucks and you’ll have to make choices every time you go to tap a payment. Do you want that outfit/coffee/holiday more than you want a home of your own? No one but you can answer this and the choices you make daily will directly affect how quickly you can save your deposit.

This doesn’t mean you need to start a business or side hustle , though for many this is a great option. An equally valid option is to get a temporary second or part-time job. Not only will your income increase, but your experience and knowledge will grow at a much faster rate.Where to put your savings The next and probably most important step is to understand where to put your savings, while you’re building up the deposit for your home.

That means if you pay the maximum amount of £4,000 between 6th April to the 5th April each year, you’ll receive a tax-free bonus of £1,000 automatically into the same account. Usually, this is paid at the end of the month to match the transactions you’ve made.

 

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