Following years of pinching pennies and
saving
(plus some assistance from your family), you’ve managed to gather enough for a
house deposit
.
However, what truly occurs once you’ve made your purchase? More importantly, how much cash ought to ideally remain in your account afterward?
Taking to the
r/HousingUK Subreddit
, @FG4u2nv raised this exact concern. Alongside their partner, they’re actively submitting bids—while they’re enthusiastic about potentially securing a home, the thought of being financially strained once they receive the keys ‘really stresses them out.’
‘We’ll have an overall budget of approximately £86,000 combined. It seems the deposit will be somewhere between £34,000 and £36,000. Additionally, we need to account for stamp duty, legal costs, and so forth, which should amount to roughly £15,000 altogether,’ they wrote, noting that they’ve set aside £20,000 for refurbishment, expecting about £3,000 left over upon completion.’
These concerns echoed through numerous responses online—similarly, @Tall_Working_2942 mentioned that when they purchased their initial house two decades back, they barely retained £500. In contrast, @heartpassenger admitted having absolutely ‘£0’ remaining, thus deciding not to implement any changes over the course of one year until they accumulated an emergency savings buffer.
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Therefore, how much money should you allocate?
really
What amount would remain in your bank account after purchasing a home? In reality, should you deplete your entire savings to secure a place on the property ladder?
What is the purpose of having an emergency fund?
Real estate authority Phil Spencer, known for his role in “Location, Location, Location,” states
It’s common to discover your bank account is quite depleted after purchasing your first home, so it’s crucial not to exhaust all of your savings.
‘If the boiler stops working or the shower develops a leak, as a homeowner, you can’t just call a landlord; you’re responsible for fixing everything,’ he notes.
It’s equally important to maintain a reserve fund to handle your mortgage and regular expenses should you suddenly find yourself without work.
Considering that the average monthly mortgage payment for a first-time buyer in the UK is £1,038 (according to
Zoopla
This would require setting aside at least £3,114 in savings specifically for the mortgage. If your monthly expenses are higher, additional reserves will be necessary.
What size of an emergency fund should you have post-purchase of a home?
So, what amount of actual money are we discussing precisely? According to Verona Frankish, the CEO of Yopa, homeowners should target between three to six months’ worth of expenses.
Her estimates suggest a typical safety cushion of around three months.
£5,899.26
, and six months at
£11,798.52
.
That’s
£1,966.42
each month as a safeguard, covering:
- On average, £1,298.96 per month for a mortgage payment.
-
£190 for
council tax -
£154.08
for energy -
£50.25
for water -
£14.54 for a
TV licence -
£34.99 for
broadband -
£223.60
For upkeep activities, including tasks such as maintaining the boiler and cleaning windows).
Frankly, keeping aside these savings could prove to be more challenging than anticipated. As mentioned
Lloyds
The typical initial purchase deposit for a first-time buyer is currently £61,090, representing an increase of £7,500 from what it was in 2023.
What occurs when you’re unable to save additional funds once purchases have been made?
In such scenarios, Phil recommends ‘ postponing unnecessary buys you planned for your house to create an emergency fund.’
Therefore, those ornamental pillows, vibrant baubles, and maybe even a new dishwasher will need to be postponed. From now on, it’s all about dishwashing.
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‘This will provide you with significant mental tranquility and help you feel more secure in your new residence,’ he says.
The buck doesn’t stop at just mortgage payments and emergency funds though: Phil also advocates for investing in mortgage protection and home emergency cover to add an extra layer of security. It’s a very adult purchase – but very necessary.
‘Mortgage protection is a type of insurance intended to pay for your monthly mortgage installments should you become incapable of working because of sickness, injury, or employment termination,’ he explains.
‘Emergency coverage at home typically supplements your standard home insurance policy. This additional protection covers the expenses for immediate repair services and service fees when you urgently require help from a plumber, heating technician, or electrician.’
‘Prices differ, however, they typically cost far less than what you would pay for a single emergency visit—thus, making this choice potentially more economical and aiding in better peace of mind as you settle into your new residence.’
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Reach out via email
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.
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