When you are budgeting for your first home, there are three main factors you need to consider. The first, and probably the most obvious, is the actual cost of the property itself.
The second is the cost of moving into it, which means everything you need to pay over and above the cost of the property so you can actually move into it. This would include charges such as stamp duty (depending on the price of the property), conveyancing fees and home-movers fees.
Finally, it is strongly recommended for you to have a cash cushion for emergencies. Getting all this money together can be quite a task, even if you qualify for assistance such as the Help-to-Buy scheme and especially if you are renting, so here are some hints on making it happen.
If you have debts (other than student and/or car loans) deal with them first
In principle, you can make the minimum payment on your debts and use the rest of your disposable income to build your savings. In practice, however, this is likely to be counterproductive for the simple reason that the interest on your debts will keep on mounting up with the end result that your lender will end up claiming money which you could have put towards your deposit had you prioritized paying off your debts before saving for a deposit. As an added bonus, being debt-free will look really good on your mortgage application.
If you’ve accumulated lots of small balances on credit/store cards, perhaps to take advantage of special offers, ask yourself if you really need the card. If the answer is no, then close it, not only will this reduce your level of temptation, reducing your number of open credit lines will also look good on your credit score.
Boost your insurance
This may seem like a strange tip, but essentially insurance allows you to make predictable, regular payments at a relatively low cost, to cover yourself against unexpected expenses, which could have a very high cost.
Self-insuring can be a perfectly reasonable option in certain situations, typically when you can easily afford to absorb the higher cost, but if you’re saving for your first home, probably the last thing you want is to see a chunk of your savings disappear into an expense insurance would have covered (or being forced to take out credit to pay for it).
It may seem harsh, but these days you might also want to give serious consideration to insuring yourself against potential lawsuits, however unreasonable they may seem. For example, while drivers are required by law to have third-party insurance, cyclists and pet owners are not (at current time) and yet both could find themselves facing third-party claims, which have the potential to be very expensive.
Track your receipts
Obviously, life is for living and you’re going to want (and need) to allow yourself some money to enjoy it, but it can be very easy to allow discretionary purchases to slide, unnoticed and hence unchecked, into general shopping, especially at places such as supermarkets.
Make a point of getting a receipt for every purchase (if possible) and taking a note of purchases for which you do not get a receipt. Then check what you are actually buying as opposed to what you think you are buying. If you don’t like having paper receipts, just use your phone to take pictures of them (or of the purchases you make for which you don’t get a receipt).