Saving for a house can be a daunting task, especially for first-time buyers navigating the complexities of the Irish housing market.
However, with the right strategies and guidance, you can turn this dream into a reality. Here are some top tips from Alpha Wealth to help you on your journey to homeownership. From understanding government schemes to mastering budgeting techniques, cultivating good financial habits, and leveraging gifting allowances, these insights will equip you with the knowledge and tools needed to save effectively for your new home.
1. Get familiar with government schemes
Check out government schemes designed to help first-time buyers. The ‘Help to Buy’ scheme supports first-time buyers purchasing newly built homes. To qualify, you need to be a first-time buyer purchasing or building a new home between 1 January 2017, and 31 December 2025. Both applicants, if applying together, must not have had a mortgage in Ireland or abroad.
Another option is the ‘First Home Scheme’, a shared equity initiative that covers the gap between what you can afford and the total cost of the home. For example, if a property costs €250,000 and you can only raise €200,000 through your deposit and mortgage, the FHS will provide the remaining €50,000 for a 20% share in the property. This scheme makes homeownership more achievable, especially for single buyers needing extra financial help.
2. Budget wisely
Budgeting is key, especially with property prices going up. Start by creating an annual budget to track your income and expenses, aiming to save at least €1,250 monthly. Use a free budget calculator to help with this. Prioritise saving by adopting a “save first, spend later” approach and ensure your money is in savings accounts with the best returns. A financial advisor can help you find the right savings accounts for your goals.
Develop regular saving habits early, ideally two years before planning to buy a home. Lenders usually look for at least six months of savings history, so show your repayment capacity. For instance, if you’re borrowing €400,000, show you can repay about €2,000 monthly, including rent.
Avoid short-term debt to maximise your saving capacity. Pay off existing short-term debt quickly, as credit cards often have high-interest rates around 22%. Use the ‘Snowball Effect’ strategy: pay off the smallest loan first, then move to the next one. Seek independent advice from a financial advisor to avoid mistakes and adopt the best saving strategies.
3. Create good financial habits
Good financial habits are crucial when saving for a mortgage. Develop a monthly budget plan to track your earnings and expenses, identifying areas where you can cut back. Regularly review your spending and switch to cheaper plans for services like subscriptions, phone, and internet bills. Cancel unnecessary subscriptions and costs to free up more money for savings.
Additionally, take advantage of tax rebates for renting, working from home, and other eligible expenses to maximise your disposable income. Managing your finances and focusing on saving will better prepare you to meet the financial requirements of a mortgage. These disciplined habits boost your savings and show lenders your financial stability and repayment capacity needed for homeownership.
4. Maximise the benefits of gifting allowances
If you’re lucky enough to get a deposit from a family member, maximise the benefits of the Annual Gift Tax Exemption. Whilst there are limits to what you can receive from family in your lifetime, you can receive a gift of up to €6,000 annually Tax free. So, for instance if you get help from parents for a wedding or buying a house, if they give you €20k this could cause a tax problem in the future. However, if Parent’s give the €6k to the child over 2 years to them and their fiancé that is €6k x 2 x 2 which is €24k.
About Nick Charalambous: Managing Director, Alpha Wealth
With a Cypriot background and having been raised and educated in London, Nick has worked in investment and private banking for some of the biggest banks in the world. With over 25 years of financial services experience in Cork, primarily as a financial advisor with AIB and Ulster Bank, Nick has built up an extensive knowledge of the financial services environment, which he shares with his clients in many areas of personal finance.
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