6 Budget Planning Tips for First Time Buyers in Birmingham

June 12th, 2024

Working to get your foot on the property ladder in Birmingham is no easy task, but now could be the perfect time to buy your first home.

There’s a lot to consider, like which area to choose and what type of property in Birmingham to buy, but above all else, your budget should be your top consideration. The last thing you want to do is to purchase something beyond your means and end up in a financial crisis. 

If you’ve seriously started considering buying your first property, you should also be considering how you can afford it, so here are the best six budget planning tips for first-time buyers from Dean Coleman Estates Limited. 

6 Tips Any First-Time Buyer Should Know

1. Stop renting

Paying rent every month is almost equal to paying monthly mortgage fees, except you’re not gaining anything! It can be especially difficult to save a deposit for your new home if you’re paying so much rent each month. If you are willing to give up your own space for roughly six to 12 months whilst you save your money, you are then likely to have enough for a deposit. You will be a homeowner much sooner than if you were trying to save money and pay rent. Moving back home with family may sound like a last resort, but you will be able to save a lot more. 

If moving in with family is not an option and you must rent, there are ways to work around this so you can still pocket some money for a deposit. You can always find a cheaper place to live, but bear in mind that this may mean a smaller property. You could also consider opting for a house share rather than renting a property of your own to help lower the cost of your rent, giving you extra money to put away for a deposit. 

2. Put your savings to work

Why have money just sitting in an account when you could be earning money on those savings? If you have a decent interest rate, you can reach your savings goal faster, but picking the right account is dependent on how you’re saving. If you have money to put aside each month and want to set up regular payments, a standard savings account might be your best bet. If you need more flexibility with the amount you put away, for example, if you save in lump sums whenever you can rather than on a fixed schedule, an instant access savings account might be the better option for you. 

3. Research areas and locations

As a first-time buyer, deciding where to buy your first home is just as important as saving for your deposit. If you haven’t picked the area you want to purchase your new home in yet, do some research to find out what you can afford and if the area fits your lifestyle and needs. You can speak to our expert team here at Dean Coleman Estates Limited to help guide your choice, but ultimately you will need to determine which areas fit your budget before anything else. Be sure to check out what the prices are for the type of property you want to buy, as well as council taxes and any other costs that need to be factored in such as travel or parking fees for example. Once you have an idea of what the cost of your property will be, both when purchasing and when actually living there, you can start to properly budget to save for a specific goal.

4. Budget for your monthly mortgage payments

Getting a mortgage means you will be required to pay a monthly amount to your lender to cover the amount you have borrowed, so it’s vital you speak to a lender or financial adviser to ensure affordability. Here at Dean Coleman Estates Limited we will be delighted to assist or recommend a financial services professional – simply ask us for details.

5. Budget for other home-buying costs

There are more costs to consider once you’ve had an offer accepted on your first home, so you should make sure your budgeting plan includes enough to take care of these when you complete on your first property. You don’t want to end up in a situation where you’re short of cash and are barely making your mortgage payments. These other costs can include:

  • Solicitor fees
  • Survey costs
  • Mortgage arrangement costs
  • Estate agent fees
  • Buildings and contents insurance
  • Furniture and decorating requirements
  • Necessary renovations or maintenance 

You may also be interested to read House Moving Costs: Are There Additional Fees?

6. Take advantage of ‘help’ schemes

Although the government Help to Buy scheme has now ended, there are still other options available to help buyers get onto the property ladder.

Shared Ownership

Shared Ownership is when buyers pay a small deposit to purchase a share of a property with a mortgage. The rest of the property is owned by a local authority or housing association. The buyer pays rent on the share that they don’t own. 

The buyer has the option to increase their ownership stake in the property over time. Then, once they own 100% of the property, they won’t have to pay rent any longer.

Mortgage Guarantee Scheme

The government’s Mortgage Guarantee Scheme was originally scheduled to end on 31 December 2022, but has been extended until June 2025. It was introduced to increase the supply of 95% loan to value (LTV) mortgages and to make them cheaper.

This scheme sees the government guarantee part of the mortgage, so making it less risky for the lender. The guarantee also compensates mortgage lenders for a portion of any net losses suffered if the property is repossessed at any time.

A 5% deposit and a mortgage with a participating lender is required to use the Mortgage Guarantee Scheme. The property being purchased must also be £600,000 or less. 

Current lenders participating in this scheme include Royal Bank of Scotland, Natwest, Barclays, Lloyds and Halifax.

What Next?

Let Us Help You Find Your Dream Home

We hope you find these six first time buyer budgeting tips helpful. For further no-obligation expert advice please contact Dean Coleman Estates Limited on 07581 875215 and we will be delighted to assist you.

Follow me on Facebook

Follow me on Instagram

Frequently Asked Questions About Buying Your First Home

Can I use any bank account to save my deposit?

The best account depends on how you save. Regular savers might benefit from a traditional account, while those saving in lump sums might prefer an easy-access option. Talk to your bank about the best fit for you.

Should I get a mortgage pre-approval before looking for a property?

Absolutely! Knowing your budget beforehand allows you to focus on realistic options. A mortgage lender or financial advisor can help with pre-approval and ensure affordability.

What are the benefits of seeking independent financial advice?

An independent advisor can provide unbiased guidance on your overall financial picture, including mortgages, savings plans, and investments.

Has anything replaced the Help to Buy scheme for first-time buyers?

There are other government programs and mortgage products available. It’s wise to explore all options with a mortgage lender to find the best fit for your financial situation.

6 Budget Planning Tips for First Time Buyers in Birmingham