If you are planning on buying a house, the first thing you will have to think about is gathering enough money for a deposit. Depending on the type of mortgage you want to secure, you will have to find between 5% and 20% of the property’s value, which isn’t an amount most people have available in their bank accounts.
On average, a first-time buyer will need to save for 8 years to afford a deposit for a home. However, using a Lifetime ISA could reduce this to around 6 years (based on an average wage of £26,000) and buying with someone else could enable you to buy even faster. To make some sense of what you need to do, we’ve put together 6 helpful tips on saving for a house deposit so you can plan for your next step.
Set up a standing order
When it comes to saving a large amount of money, you’ll need more than just will power to hit your target. That’s why it’s a good idea to set up a standing order to ensure a fixed amount comes out of your salary each month into a savings account or ISA. It means you never have to think about doing it manually and you will naturally adjust your spending to accommodate the extra outgoing.
Sell unused items
Take a good look around your home and you’ll soon start to find items that are no longer of use to you. Over time, items take up a certain fixed position around the home, even if they are no longer used, and just become ‘part of the furniture’. But there’s a good chance you’ll be able to make a little bit of money from selling them on eBay or even at a local market. It can be anything from disused furniture pieces, old vinyl records and CDs or ill-fitting clothes (which can be sold on places like Depop) all of which can be used to help build up your savings pot.
Review your bills & outgoings
This may be the first place to start for many people, as it can give you clarity on how much you can put aside from your income to save up. Of course, there will be a large chunk of your outgoings that can be fixed, such as your current monthly rent, utility bills, travel etc. You may have to make some changes to your lifestyle for a certain period so you can save some money. Remember, every little penny counts when saving for a deposit, so even if the saving doesn’t seem that big, it all goes to helping you achieve your end goal.
Shop smart
When it comes to buying food and other items for the house, we all get stuck in buying routines as it means we don’t have to think too hard about a mundane task. However, if you take a moment to look around, you’ll soon find there are lots of discounts available that could help you save some money. Buying in bulk is a good idea for some items like pasta, rice and canned foods, especially if you know you will use them before the sell by date expires. Also consider buying ‘own brand’ items, which are often as good as name brand products – in many cases, the only real difference is that one has more attractive packaging than the other.
Set yourself goals
Setting a saving goal is a simple but helpful trick that can keep you motivated as you continue to put aside your money. The best way to do this is to break it up into smaller, more achievable targets that will build towards the final amount. For example, if you want to save £5,000 over the next 12 months, then break that up into more manageable monthly targets of £416. As you pass each smaller target, it will be easier to maintain your motivation to hit the grand total. Try to be realistic with your targets based on what you can afford to save, otherwise you might be tempted to give up if you are falling short every time.
The bank of mum and dad
Another option could be to get some financial help from your parents or other members of your family. If they are in a stable financial position, they may be able to lend, or even gift, you some money that can be put towards your deposit. When you are borrowing the money, it is a good idea to write down a repayment plan so everyone is clear on how the debt will be repaid, which will help to avoid any confusion or potential disagreements in the future. Other family options could include moving in with your mum and dad to cut down on rental costs and save money.