10 Top Tips on Saving Your House Deposit
Saving up for a house deposit in 2021 is no mean feat, but hopefully these 10 tips should help you through…
First time buyers these days don’t have it easy at all. What with ever-increasing rent prices, a dwindling job market, and extortionate house prices, it might seem completely impossible to achieve home ownership.
That said, once you’ve saved up your house deposit, as well as saved extra to afford an online property solicitor , you can then move onto the fun part of choosing a place to call your own. You can also start saving for the less practical things to spend your money on, like travel and adventures.
This should be incentive enough and, although the odds are stacked against you, it’s not completely impossible. So, for some tips to help you save up and get your deposit faster, read on for 10 ideas…
Make Use of Government Incentives
Although the Help-to-Buy ISA is no longer available, there are a number of other government-funded incentives to get first-time homeowners on the ladder. Some of the ones worth looking into include:
Help-to-Buy Equity Loan Scheme: for first-time buyers looking to purchase a new-build property, requiring just a five percent deposit.
Shared Ownership: buying a share of the home form your landlord, and renting out the remaining share for yourself.
Right to Buy: for those who rent their homes from the council, they can buy the house for a discounted price.
For more details about the above schemes, Money Advice Service have a great article about them, here .
Maintain Good Spending Habits
Unfortunately, these days, saving up for a house deposit isn’t where it ends; you also need to have good spending habits to be considered for a mortgage. Yes, this will certainly help with saving a deposit in the long run. However, without this, you’ll be much less likely to be considered for a mortgage and can’t hope to proceed with your home purchase.
Some of the key elements of your spending history you should keep an eye on include:
Your credit score
Your income
Your employment status
Your monthly outgoings and spending habits
Any existing debt you have (this shouldn’t include student debt)
This full and in-depth list should help you to increase your chances of getting accepted for a mortgage.
Consider Moving Somewhere Cheaper
Prior to the pandemic, many young people were forced to pay sky-high rent prices due to being unable to find decent work where they currently lived. This meant they had to move away from home, and pay massive rent prices, making saving up really tricky.
Now, working from home in many industries is entirely possible. This means many people with family are able to move in with them to avoid paying extortionate rent prices. By working from home in this way, they can save up huge amounts at a time.
Budget for the Little Things
Saving for a house doesn’t mean you need to completely skimp out on everything; you deserve to have some quality of life along the way. To allow you to save, but also treat yourself each month too, you should have a budget in place for all your expenditure.
This budget can include everything from rent, to bills, to food, to nights outs, and even lunches and coffee breaks. Just because you’re saving doesn’t mean you shouldn’t be able to buy those little conveniences you love. If this is all part of your monthly budget and plan, you can afford to splash out a here or there.
Set Goals
Setting manageable goals is an amazing way to slowly rack up the money in your savings pot. It also makes it a fun way to see your money increase.
The word “manageable” is the key phrase here. You can’t be setting yourself a goal of £500 a month if you only have £500 a month in disposable income. You need to be realistic.
To do this, take into account your monthly outgoings, including travel, rent, bills and food. What do you have left over? From this, assess how much you realistically need to spend on yourself each month. Then, voila - you have your monthly goal!
Have Multiple Bank Accounts
A great way to help you achieve this goal is to have multiple bank accounts. This is a great way to compartmentalise your money, and could include:
A current account for everyday expenditure
An account for all your monthly bills and payments
One account for generic savings
A final one for your house deposit
Save Your Cash on Pay Day
Now that we’ve told you what bank accounts might be good to set up, you’re probably wondering how to make use of them effectively. The best way to do this is to save your money on pay day, like so:
Make sure your pay day money enters your current account.
On pay day, transfer all your living expenses – that’s everything you need each month to live – into your monthly bills account. This should have standing orders set up for your rent and other bills. It should also be the account you use to buy your weekly food shop and travel expenses.
On pay day, transfer a bulk sum into your house deposit pot (in some cases, this might be a Help-to-Buy ISA). If possible, transfer the maximum, i.e. £200, every single month.
If you fancy being extra savvy, save another hundred (or more, depending on your salary) into your generic savings account, just to have some squirreled away.
Now, your current account will just contain the money leftover for you to use as you wish. This can be for extra snacks, drinks, nights out, and general expenditure to allow you to treat yourself when you fancy.
With any luck, when pay day arrives, your current account should have some leftover money from the previous month. Transfer that to your extra savings account too.
Set Up a Standing Order
The above process takes a fair amount of self-discipline. So, if you’re really struggling to deposit money into your various accounts on pay day, set up standing orders. This way, the money has to come out every month, meaning you don’t need to even think about it.
Meal Plan
Meal planning is a sure-fire way to help you save money. If you choose recipes to cook each week, mapping out the ingredients and quantities before shopping, you’ll not only reduce waste but also expenditure. After all, if you have the food waiting for you in the fridge, you’ll be much less likely to splurge on a takeaway.
Shop Cheaply
Once you’ve planned your weekly meals and have your list, you can then make a trip to the cheapest supermarket near you. Bulk buying your weekly food like this will be much cheaper than buying the odd bit here and there at your local small shop. It really is these little spending habits that rack up.
Ready to Save for Your House Deposit?
As you can see, although the odds are truly stacked up against first-time buyers in the UK, it is possible to get on the property ladder. With a nip and a tuck here or there, some savvy saving, and a pandemic to add to the mix, things can be made just that little bit more possible.
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