How to Save for Your First Home
Looking for your first home is exciting, and getting on the property ladder is a significant step for anyone.
However, with the cost of living in the UK reaching new highs, taking that first step may appear to be more difficult than before (unless you are buying new of course).
With this in mind we’ve put together these helpful tips for saving for your first home. Read on to find out some of the small changes you can make to help you get closer to owning the property of your dreams.
Figure out how much you really need
Start by figuring out what you can realistically afford to buy. You can use our online mortgage calculator to help get an idea of this, but for a true estimate and to get a mortgage in principle, speak to a mortgage adviser. They will review your current financial situation and help you to find out how much you can borrow, so you know what your goal will be to save for.
It's important to keep an open mind regarding the different types of options available to you. Work with what you can afford without stretching yourself too much.
Minimum mortgage deposit needed
Once you know your ballpark, the next step is working out your deposit. A deposit is usually at least 5% of the cost of the property, but it’s recommended to put down more if you can.
The bigger the deposit, the wider range of mortgages you will have access to, because it lowers the risk to mortgage lenders, decreasing the amount you’re borrowing and increasing the equity in your home from day one. Find out how we could help with your deposit on our offers page.
Don’t forget the First Homes Scheme
The First Homes Scheme is a UK government initiative available in England, designed to make home ownership more affordable for some first-time buyers and key workers. It typically applies to new build homes.
Homes under the scheme are sold at a discount of at least 30% off the market value, making the purchase of a new home more accessible. When you sell the property, it needs to also be sold on at the discounted rate, ensuring it remains affordable for future buyers.
To be eligible, you must be a first-time buyer, your household income must not exceed £80,000 per year (£90,000 in London), and the discounted price of the home must not exceed £250,000 (£420,000 in London).
To learn more about buying a Miller home under this scheme, see our offers page: First Homes Scheme
Tips for saving
Now that you know what you can afford, start putting saving goals in place to help achieve your target.
Having a set goal to save each month is a good place to start. Work out your total (e.g., bills, food shopping, debts) and, if you’re in a position to do so, try to manage your monthly wages with an 80/20 split, with 20% going to your savings. Saving this portion of your income a month is a quick way to build up some cash for your deposit.
Here’s some of our top tips to help you save for your first home:
Open an ISA
A Lifetime ISA can be opened by anyone aged 18-39 and allows you to save up to £4,000 every tax year towards buying your first home. The Government will top up your savings by 25% to a maximum of £1,000 per year. The ISA allows you to grow your deposit over several years, and you will earn interest on whatever you save.
The money from the ISA can only be withdrawn when you are buying your first property and used on homes up to £450,000.
Additionally, if you are buying your first home with a partner, it is worth bearing in mind that each individual can open a Lifetime ISA, meaning you will both receive the government bonus.
Cut down on spending
Making small changes to your everyday spending can help you save hundreds of pounds a month by just cutting little expenses from your life.
If you frequently treat yourself to a cup of coffee before heading to work each day, why not make the coffee at home and bring it to work in a to-go cup? All of those £3 coffees can add up - consider popping the pennies into a savings account instead.
Spending some time looking through your bank accounts and figuring out what’s going in and out will also help you assess your monthly spending patterns. From there, you can quickly determine where you can make savings.
Lifestyle changes
Implementing lifestyle changes, small or large, can really have a huge effect on your savings.
For example, you might have a habit of buying lunches every day from cafes or sandwich shops near your office. They may be delicious, but when added up monthly it can amount to a lot of money.
Instead, prepare your breakfasts and lunches at home from scratch while you are saving. The long term benefit of securing your first home will be more than worth missing out on fresh sandwiches.
Other lifestyle changes which could help you to save more include:
- Review your monthly subscriptions and cancel unused streaming services, gym memberships, or subscription boxes.
- Limit eating out and takeaways to once a month as a treat.
- Switch to own-brand groceries or try budget-friendly supermarkets for your food shopping.
- Consider moving back in with family temporarily to save on rent.
- Sell unused items and clothing on platforms like eBay, Vinted, or Facebook Marketplace. The extra cash can go directly into your savings.
- Walk, cycle, or use public transport instead of driving, especially for short trips.
Not all of these changes will be relevant for everyone, but it’s about finding what works for you and your circumstances.
Find your dream home
Once you’ve established your goals and how you can start to save, you’re well on your way to becoming a property owner! Doesn’t that feel good? To start your search with Miller Homes, try using the search tool on our website to find new build homes in your area.
If you’re in need of more guidance and advice, book an appointment at one of our sales centres where a Miller Homes development sales manager can talk you through your options.