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Top tips on saving for your next home

Sep 16, 2024
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Saving for your next home whilst paying your current mortgage can be tricky. But the good news is that making small changes to your spending habits can go a long way.

Wondering how to save for a new home? From working out your finances to creating a budget, we’ve put together a list of helpful tips to make the process easier.

Key Takeaways

1. Assess Your Finances: 
Start by understanding your current financial situation. Calculate your monthly income, expenses, and how much you've paid off on your mortgage. Knowing this will help you determine how much you need to save for your new home.
 
2. Create a Budget: 
Set a budget that includes your new home expenses and monthly spending. The Money Advice Service offers a helpful online tool to create a budget based on your income and outgoings.
 
3. Get Your Home Valued: 
Having your house valued helps you understand its worth when you sell it. If your property has appreciated in value, you'll make a profit that can offset legal fees.
 
4. High-Interest Savings Account: 
Consider opening a high-interest ISA to save monthly while earning interest. Speak to your current bank to find an account that suits you.

How to work out your finances 

To save for your next home, start by looking at your current financial situation. Follow these three easy steps to cover all bases.
 

1. Check your monthly income and outgoings

First, calculate your monthly income and estimate your monthly outgoings. This will help you work out how much you need to save for your new home. 
 

2. Calculate your mortgage balance

Use our Mortgage Affordability Calculator  or contact your mortgage provider to find out how much of your mortgage you have paid off. If you have paid some of it off, you will own more of your existing home than when you first bought it. This means you’ll owe the bank less when you come to sell.
 

3. Explore offers and buying schemes 

When searching for a new home, it's useful to understand what’s within your financial reach. Research house prices in the areas you’re interested in to get an idea of how much you’ll be paying. 
 
Remember, there are schemes available to help you move up the property ladder. For example, with Part Exchange Xtra, we could buy your current property so that you can move into your new home quickly. 
 
Learn more about getting your finances in order. 
 

How to create a budget to help you save

 
Once you’ve understood your finances, it’s time to set a budget. This should cover the budget for your next home and the amount you’ll be spending each month. You can do this by:
 
• Using online tools: There are a range of online tools that can help you budget. The Money Advice Service have designed a helpful tool that creates a budget plan. It assesses your current income and outgoings and calculates what you need to do to save money. This will help you see what you’re currently spending and set your budget.
 
• Setting a savings goal: This will help you calculate how much money you need to purchase your new home. You can then work out a plan to reach your goal. Make sure that your savings goal is realistic and set an achievable amount each month. It’s also important to have money left over to spend on leisure activities. 
 
You’ll need to factor in additional costs when purchasing your next home, including: 
 
• Early repayment fees
• Exit fees
• Arrangement fees
• Legal fees 
 

Get your home valued

Having your house valued will help you understand what it'll be worth when you sell it. If your property has gone up in value, you will make a profit. Once you have sold your house, you can use this extra money to pay off any legal fees, such as estate agent fees. This will take a little pressure off your savings.
 

Invest in a high-interest savings account

If you have already bought a home, you may be familiar with high-interest ISAs. These bank accounts help you to save monthly whilst building up interest. You can speak to your current bank to see if they have any accounts that will work for you. Alternatively, there are plenty of online help tools and websites that offer advice on the best savings account for your circumstances.
 

What small changes can I make to help with my finances? 

Making small changes to your spending habits can help you save for your next home. Here are a few ideas to get started: 
 
• Make a weekly shopping list: If you’re prone to impulse buying in the supermarket, you could create a shopping list to ensure you only buy the things you need. 
• Sell your unwanted items: From clothes to furniture, selling unwanted items on platforms like eBay is a great way to make some extra cash. 
• Plan your meals: Spend less on your weekly shop by planning your meals in advance. 
• Take advantage of free activities: From museums to art galleries, there are free activities available in almost every region of the UK, so there is always something to do on a budget.
 
 
Ready to find your next home? Discover our 2 bedroom homes and 3 bedroom homes across the UK, perfect for first-time buyers and growing families. We also have a fantastic range of offers and schemes to help you get moving. 
 
Call or visit our Sales Advisers today to start your homebuying journey. 
 

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