Saving enough money for a deposit on a house is a huge task, especially with house prices on the rise. Sometimes, a small change can make a big difference, which is why we’ve created a list of top tips to help you save as much as you can for your first home!
Keep outgoings low.
There are several ways that you can do this, from cutting down on nights out to meal prepping, but the more you can save this way, the better. If you’re currently renting, you’ve got plenty of scope to save more money than you are at the moment. Consider a house share, or moving in with family for a year or two to speed up your saving process. If you’re paying £500 a month and can save most of that by moving back in with parents (which a lot of first-time buyers end up doing ), you could save over £5000 more a year than you are now, moving your timeframe to buy much sooner than if you’re having to rent.
Nail down how much you need to save.
A deposit is standardly 5-20% of the sale price of a house, so knowing how much you need to save is vital to get you on the right path of securing your mortgage. Decide what sort of property you want to buy and where – the difference in price between a house in the centre of London and one in Liverpool will make your eyes water – this will give you a good idea of what you’re working towards. It will also let you make a plan that you can stick to, deciding how much to save each month and how long it will take you to get to your final figure.
Get the best savings account you can.
Spend some time looking at the various offers that banks can make you and see what’s best. You want to try and find the highest rate of interest possible and make your money work for you. Don’t forget to read the fine print though – most of these accounts will require that the money is in them for at least a year before the interest kicks in. Still, it’s likely that it will take you longer than this to save your full deposit anyway.
Look into government help schemes.
If you qualify for any help schemes, you should apply for them. They can lend a big helping hand to your deposit and allow you to buy earlier than saving on your own. Some of the top schemes available to first-time buyers include –
• Buying a property with shared ownership. This is cheaper as you can purchase a smaller percentage of the property to start and then buy more in the future when you have the funds. This means a lower deposit which you’ll be able to save much faster.
• Equity loans. You can get a 20% loan from the government on new build if you’re able to save a 5% deposit. This, again, means you don’t have to save as much for your deposit and allows you to buy faster.
• Lifetime ISA. This will give you a 25% boost each year if you save £4,000. If you’re buying as a couple, you can both open a lifetime ISA and both benefit from the 25% top-up.
Make extra money where you can.
If you can, look into freelancing, or taking overtime at your current job. You can also look into selling things that you no longer need or want. Anything extra that you can earn will make a difference to your savings and get you in a position to buy faster.
Saving for a deposit takes a lot of time and patience, so all of these tips can help to get you there that bit faster. Plan as well as you can and stick to it, and within your timeframe, you should be able to own your first perfect home!
Article from Holly Herbert, We Buy Any House