After years of scrimping and saving (and maybe a little bit of help from your family), you’ve finally got enough together for a house deposit.
But what really happens after you’ve bought? And crucially, how much money should you actually have left in the bank?
Taking to the r/HousingUK Subreddit, @FG4u2nv asked this very question. Together with their partner, they’re currently making offers – and while they’re excited at the prospect of getting on the ladder, the idea of ‘being skint’ after picking up the keys ‘freaks them out.’
‘We’ll have a total of around £86,000 between us. Looking likely that deposit will range from £34,000-£36,000, and on top of that is stamp duty, legal fees etc which will come to around £15,000 all in,’ they penned, adding that they’ve allocated £20,000 towards redecorating, and anticipate that they’ll have around £3,000 remaining once everything’s complete.
These anxieties were shared by countless others in the comments section – as @Tall_Working_2942 shared that, after buying their first home 20 years ago, they had less than £500 left. Meanwhile @heartpassenger confessed that they had ‘£0’ left, and so didn’t make any tweaks for a year while they built up their emergency fund.
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So, how much money should you really have left in the bank after buying a home? And realistically, should you be completely rinsing your savings account to get on the ladder?
Why do you need an emergency fund?
Property expert Phil Spencer (of Location, Location, Location fame) tells Metro it’s ‘easy to find your bank account is pretty bare’ after buying your first home, but it’s essential not to run your savings dry.
‘As a homeowner, there’s no landlord to call if the boiler packs up or the shower springs a leak — it’s all on you,’ he points out.
It’s also critical to have a buffer to cover your mortgage payments and monthly outgoings in case you unexpectedly lose your job
Considering that the average monthly mortgage payment for a first-time buyer in the UK is £1,038 (according to Zoopla), that would necessitate at least £3,114 aside in savings for the mortgage alone. And if your monthly outgoings are higher, you’ll need extra reserves.
How much of an emergency fund do you need after buying a house?
So, how much cold, hard cash are we talking exactly? CEO of Yopa, Verona Frankish, says homeowners should aim for three to six months’ worth of costs.
Her figures place an average three-month safety blanket at £5,899.26, and six months at £11,798.52.
That’s £1,966.42 per month as a safety blanket, which covers:
Admittedly, holding back these savings might be easier said than done. According to Lloyds, the average first-time buyer deposit is now £61,090 – which is £7,500 more than it was in 2023.
So what happens when you can’t afford to put aside extra money after buying?
In situations like these, Phil suggests ‘delaying those non-essential purchases you’d envisaged for your home to instead build up a safety cushion.’
So, those decorative cushions, colourful trinkets, and perhaps even a new dishwasher will have to wait. It’s washing up from here on out.
What’s your home like?
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‘This will bring you great peace of mind and allow you to feel more secure in your new home,’ he adds.
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 form of insurance designed to cover your monthly mortgage payments if you’re unable to work due to illness, injury, or job loss,’ he outlines.
‘Home emergency cover is usually an add-on to your home insurance policy, which will cover the cost of emergency repairs and call-out charges if you need urgent assistance from a plumber, heating engineer or electrician.
‘Prices vary, but they are often much less than you’d pay for just one emergency call out – so this is an option which can save you money and help you sleep a little easier in your new home.’
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