How to save money for a house deposit
Buying a house is likely to be one of the biggest financial commitments you make in your life, so it’s important you ensure you are managing your finances correctly.
The first thing you need to do is work out how much you need for your deposit, and how much you can afford to save each month. With the constant changes in the property market, the deposit you’ll need will vary on the mortgage you can take out but remember the more you save for your deposit will result in lower repayments each month!
The major banks all have handy online mortgage calculator tools where you can enter your details and calculate the mortgage you would be likely to be offered. Most of these come with a sliding scale so you can see how the deposit might affect the mortgage, and this will give you a number to aim for.
Once you’ve worked out how much you need to save, you need to look at your monthly expenses to work out where you can save. Saving isn’t always easy, but there are things you can do to speed the process up:
Invest in a Help-to-Buy ISA.
The Help-to-Buy ISA is available for first time buyers through a variety of banks and building societies and helps you by boosting your savings by 25%. For every £200 you save into your ISA account you receive a bonus of £50 from the government towards your first home. You can find more about the Government’s Help to Buy ISA here.
However, there is a deadline for new accounts, you have to sign up before midnight on the 30th November 2019 to open a Help to Buy ISA. If you already have an account, don’t worry, you can continue to save into your account until November 2029!
Swap your work lunches for homemade lunches.
Save yourself that daily outgoing by making yourself a sandwich at home. If you spend £3.50 on your lunch every day, by switching you could be saving over £800 a year!
Cut down on your subscriptions.
Whether that’s your TV package or the gym you keep promising yourself you’ll go to tomorrow, if you can reduce your outgoings by £50 a month that’s an additional £600 a year you could be saving towards your new home.
Skip the commuting coffee.
We are all guilty of that drive-thru coffee on our way to work at 7am. If you think about it long term, that £3 cup of coffee could add up to over £700 a year.
Change your living situation.
Moving back in with your parents sounds like a definite no-no, but it does have perks, like being able to save two thirds of your salary towards your new home instead of paying for rent, council tax and bills.
Bank of Mum and Dad.
If you’ve got the luxury of your parents dreading you moving back in with them, then you may find they’d be happy to contribute towards your deposit. Whether that’s a loan or a generous gift, it adds to how quickly you will be able to save for your deposit.
Get a side hustle or part time job.
Taking on weekend work, an extra weekly bar shift, delivering pizzas or selling crafts might seem like the last thing you want to do with a full-time job. It would definitely get you closer to your goals, and fast!
Make sensible swaps.
Could you sell your car and get a cheaper model? Swap designer clothes for the high street? Swap luxury holidays for camping? Everyone has areas of their life which can be temporarily reigned in whilst saving. Just remember it’s not forever.
If you have any innovative ways that you have saved up for a deposit, we’d love to hear from you!