4 Tips for Saving for Your First Home

Your financial status is so much more than just how much you earn in your current role.

It goes without saying that we all come from different backgrounds, and as such, we all have different financial situations. When it comes to saving for your first home, it’s easy to compare yourself to those around you, whether that be friends or colleagues also trying to dip their toe in the housing market, or online influencers sharing their lavish lives through YouTube and TikTok.

It’s important to remember, however, that no two financial situations are the same and that the amount you’ll be able to save for a big purchase may differ from those around you – and that’s okay!

Below we provide you with some tips and tricks to help you set yourself up with realistic budgets and realistic expectations.

Tips for Saving for Your First Home

1. Consider essential vs. non-essential cutbacks

First things first, however daunting, it’s important to sit down and look at your monthly income versus your monthly outgoings and prioritise what is essential and non-essential spending. This will help you manage your current spending and provide you with an overview of where you can make budget cuts to add to your savings pool. Examples of what elements to look at include:

Essential Spending (Needs)

• Rent
• Electricity
• Council tax
• Broadband/Wi-Fi
• Groceries
• Clothing (e.g., school uniforms)
• Phone bill

Non-essential Spending (Wants)

• Subscriptions and memberships (e.g., Spotify and the gym)
• Entertainment (e.g., cinema, bowling, concert tickets)
• Dining out or dining in
• Regular spending on clothes and grooming products

There shouldn’t be a severe cut of everything non-essential in your life as it’s still important to enjoy yourself, however, it’s a chance to cut back and live better within your means. For example, if you eat out two or three times a week, perhaps limit this to two or three times a month.

If you have multiple subscriptions such as Netflix, Amazon Prime and Disney Plus, cancel one or two of these and keep the one you use most often.

This means that you aren’t restricting yourself from the things that you enjoy but simply cutting back on them, mitigating the risk of falling back into undesirable spending habits. Being realistic here is key.

Once you’ve looked at non-essentials, you can look at your essential spending and see where you can reduce costs. Some examples include:

• Switching your energy tariff to a set monthly amount
• Switching to a sim-only contract as these are often cheaper
• Switching to a more budget-friendly supermarket such as Lidl or Aldi, as well as replacing some branded items with non-branded (which are often just as good)
• Making use of loyalty cards, club cards and in-store discounts

Even cutting down on one or two non-essentials and making one change regarding an essential will contribute to the amount you’re able to save, as everything does eventually add up, even if it takes time!

2. Utilise Available Tools Through Your Bank

A good place to start would be to reach out to your current bank and arrange an appointment to speak to them about the current tools, accounts and schemes they offer to support their customers with their savings. Alternatively, you can do some online research yourself as websites usually provide this kind of information.

For example, the Bank of Scotland provide a Monthly Saver account that offers an interest rate of 4.5%, which is considerably higher than the other accounts they offer, making it possible to save that little bit extra, quicker. They also offer a Savings Calculator function, where you can calculate how much you need to save, and how long it will take you, helping you to manage your time expectations. This is especially good when it comes to setting your budget as previously mentioned.

Santander offer similar interest rates of 4% on their Santander Edge Cover account, however you can only open one savings account per current account, and sometimes there’s loopholes similar to this one, so it’s worth doing your research or going directly into the bank.

3. Save with Fintech

With an increase of online banking, open banking and financial apps, it’s the perfect opportunity to take advantage of these tools and how they can help you on your saving journey.

Fintech, which is a portmanteau for financial technology, is a term that is used to describe the augmenting, streamlining, digitalising and disruption of traditional financial services and Fintech companies are particularly useful when it comes to saving.

Through AI, blockchain and RBA (Robotic Profess Automation), they can teach you about your spending habits, support budgeting, consolidate your bills and have various automatic saving features.

We’ve consolidated some of the UK’s most loved and popular Fintechs to help you out:

Monzo

Offering a savings feature called Pots, Monzo allows you to group your money into different pots meaning you can separate your spending money, from money that is specifically for saving. Monzo also offers features such as round-up, where they will round each of your purchases up to the nearest pound, and allocate change to your savings pot, as well as locking your pots so that your savings are inaccessible.

Revolut

Revolut offer Saving Vaults that are specifically well loved as interest is paid daily. These Vaults are extremely flexible as you can either save as you go or set up a recurring transfer as often or as little as you require. Revolut’s Saving Vaults are also very useful if you are saving up your deposit with a partner as you can share access to Vaults with other members.

Atom Bank

Atom Bank were the first UK’s app-based bank and are committed to making a difference by simplifying finances. They offer a fixed saver account option where you can set the amount of time you will be saving for and the interest rate, meaning it’s a great option if you have a date in mind for purchasing your home. Your money isn’t available until the fixed rate ends, but with set interest rates and regular updates, it’s a straightforward and efficient way to save.

4. Ask for Help and Advice

Most importantly, it’s good to remember that you won’t be the first person to have ever bought a home and you won’t be the last. There’s plenty of people, resources, and advice out there for first-time home buyers like yourself.

Firstly, mortgage advisers dedicate their entire careers to supporting those through their property buying decisions and it’s extremely beneficial as a first-time buyer to look into mortgage advising and how it can help you.

Mortgage advisers are extremely knowledgeable in their fields and are experts when it comes to the current state and trends of the financial market. They are also highly skilled in guiding and advising you through what can be a very daunting experience as first-time buyer, offering plenty of patience, compassion and advice.

First-time buyers find the assistance with their application processes and the access to exclusive information regarding mortgage lenders, rates and products to be specifically helpful through mortgage advisers as this can be difficult when navigating for the first time.

To keep you on the right track, we’ve collated some of the best places to research more about mortgages, advisers and costs:

• The Mortgage Advice Bureau offers a variety of resources, expert advice and their own mortgage calculator
• Mortgage Advice Scotland have a ‘first time buyer’ FAQ section on their website that any first-time buyer is welcome to submit a question to, and you’ll receive an answer from someone with mortgage expertise
• Unbiased provide information on mortgage advisers, lifetime ISA’s and mortgage calculators

We hope that with these tips for saving for your first home you’ll find it easier to set aside what you need to get what you want - good luck!

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