Advice from the experts: My top tips to help make your first home a reality

Whether buying your first home seems like a distant dream or is something you hope to do in the near future, there are steps you can take now to make home ownership a reality sooner than you think.

Buying your first home is one of the biggest financial decisions you’ll ever make, so having a well-prepared plan is essential for success. Here are some tips to support you on your journey to buying your first home.

Start by doing your research. Work out how much you can afford to pay each month and how much you will need for a deposit. A larger deposit could mean a better interest rate and lower monthly mortgage payments. Talking to a good mortgage adviser or using a mortgage affordability calculator can help you estimate what you can afford by looking at your income and outgoings.

Don’t make the mistake of only saving towards your deposit. You will also need to think about other costs such as stamp duty, legal fees and building insurance. These can add up to several thousands of pounds, so build this extra cost into your saving plan.

The cost of buying a house and moving

Try and pay off (or at least bring down) what you owe. Paying off what you owe, for example on credit cards, loans or overdrafts, will not only build up your credit score, but it will increase your chances of success when it’s time to apply for your mortgage.

Decide on your budget and start building a savings plan. This might sound daunting, especially if money is tight, but these tips will help:

  • Set achievable targets – think about what you can realistically put away, no matter how big or small.
  • Save a fixed amount each month – setting up a standing order for just after pay day will help.
  • Use a Budget Planner to gain better control over your finances and get into the saving habit.

Utilise existing schemes. The government wants to encourage home ownership, and there are various schemes aimed at helping people build a deposit. The Lifetime ISA (LISA) lets first time buyers save up to £4,000 every tax year, with the government adding a 25% bonus. That could mean a £1,000 tax free contribution every year you save plus savings interest. Find out more about Lifetime ISAs in this useful guide.

Some government schemes can also help with your purchase. The Help to Buy: Equity Loan is a government scheme to help first-time buyers purchase a property with just a 5% deposit. You can borrow 20% of the purchase price (40% in London), interest free for five years. There are even special schemes to help with part-ownership and those who are disabled, key workers or working in the armed forces.

Government schemes for first-time home buyers and existing homeowners

Andrew Johnson DIP PFS Cert (II) MP , Advice Manager – Regulated Financial Products at the Money and Pensions Service

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