Open Market Buying: Saving Tips to Buy Your Dream Home

Buying a home is one of the biggest financial milestones you can reach, but with rising property prices and the increasing cost of living, saving for a deposit can be challenging, to say the least. But it is possible. With some planning and budgeting, you can achieve your dream of buying on the open market. 

What Is Open Market Sale? 

Open Market Sale is the traditional way of buying a home, whether purchasing in full or with a mortgage. Unlike other buying schemes, like Shared Ownership, you own the property outright as either a leaseholder or freeholder, depending on the property's tenure. 

Tips To Save For a Property 

Looking for practical and accessible money-saving advice to help you buy on the open market? You've come to the right place. These 10 tips are among the best ways to save for a house or apartment. 

1. Check Your Credit Score 

Your credit score can significantly impact your chances of mortgage approval by a lender. It's informed by factors like your payment history and amounts owed, giving lenders an understanding of your ability to take out credit. Minimising any debt before applying for a mortgage will not only improve your chances of receiving a loan, but it can also help you save by freeing up money to put toward your deposit. 

2. Find Out What You Can Afford

Several factors, such as your salary and credit score, determine how much you can afford to spend on a property. Generally, mortgage lenders offer up to 4.5 times your annual household income, depending on your financial situation and the property you wish to purchase. Mortgage affordability calculators can give you an idea of how much you can afford, which will help you hone your property search. 

3. Determine How Much You Need to Save 

Once you've figured out what you can afford to buy, you can determine what you'll need to save for a deposit. The average minimum deposit required for buying a property in the UK ranges from 5-20% of the purchase price, but you can put down more if you wish. For example, for a property worth £150,000 a 5% deposit is £7,500.

It’s important to consider additional costs on top of your deposit that you need to cover when buying a home such as your solicitor's fees, stamp duty and a Property Survey. Additional fees can be tricky to calculate as they’re dependent on the property, your chosen mortgage advisor, and your lender. However, mortgage advice websites like Reallymoving and Money Saving Expert provide helpful guidelines to get you started. 

Your Lender fees tend to be what rack up the most. A Mortgage Arrangement fee from your lender can be up to £2500. You may also need to pay a property valuation fee, which is likely to be in the ballpark of £300 but could be more.

Note that a Property Survey is different from the Lender’s valuation and will incur its own fee. You pay a surveyor to inspect the property you’re buying so that you’re aware of any potential issues and can effectively negotiate the asking price. 

4. Open a Savings Account 

Maximise your funds by opening a dedicated savings account for your property purchase. Look at available interest rates and the account conditions to determine which account is best for your circumstances. The Lifetime ISA is a popular choice for prospective home-buyers, as it can be used to buy your first home or save for later in life. With this account, you can put in up to £4000 a year, and the government will add a 25% bonus to your savings of up to £1000. 

5. Track Your Spending

Assess your expenses to see whether there's anything you can cut back on, like travel or entertainment. Simply cancelling subscriptions and memberships you don't use or shopping at a different supermarket could help you minimise your monthly outgoings, increasing the amount you could save. 

6. Automate Your Savings

Once you've determined the monthly savings you need to make, set up an automatic transfer to regularly deposit the money in your savings account. This can help you resist the temptation to spend your hard-earned cash and ensure you're saving it for your dream home instead. 

7. Boost Your Income

A higher income brings with it the opportunity to save more. Having a clear-out and selling things you no longer use is an easy way to boost your income and prepare for the big move. In addition to decluttering and giving items a second life rather than throwing them away, you can make extra money for your deposit.

8. Be a Savvy Shopper

Look out for discount codes and sales to stretch your budget further when shopping. Additionally, use cashback sites when shopping online to earn money on purchases. While rates vary and sums can be modest depending on how you spend, the money adds up over time, and it's an effortless way to boost your earnings.

Money-saving apps like Too Good to Go, Vinted and the Trainline App are also growing in popularity. 

Too Good to Go

This app connects you to nearby restaurants, cafés and supermarkets with leftover food. You’ll receive an app notification if there’s a food pickup available near you, typically priced around £3. 

Vinted

Vinted is one of the most popular online marketplaces for used clothing, so you can make money with your old things and save money buying at the same time. 

The Trainline App

The app currently runs SplitSave, which allows you to access cheaper journeys when you buy separate tickets for different legs of your journey, rather than one directly to your destination. 

9. Set Spending Limits

Implement a monthly budget where you set spending limits on non-essentials. This can help you spend your money mindfully and avoid impulse purchases. Instead of buying items on the spot, give yourself time to consider whether it's a necessary purchase or if you could spend that money elsewhere, such as on your dream home. 

10. Speak to a Financial Advisor 

Financial advisors can provide independent advice on how to save for your dream home, tailoring the guidance to your financial situation. Furthermore, a mortgage broker can help you determine which mortgage product is best for your circumstances when buying on the open market. 

Learn more about the home-buying process with Southern Housing New Homes by exploring our buying guides and FAQs.