Most mortgages require between 5% and 15% deposit, plus some additional fees. The higher your deposit, the lower your monthly payments are likely to be – which means the more you can save before making your purchase, the better!
So how can you make the most of your money and reach your deposit savings goal as efficiently as possible? Here’s our handy tips for saving for your first house deposit:
It’s always worth checking out if the Government have any schemes on offer for first time buyers that could help you save for your first home. These may include Lifetime ISAs, Right to Buy and Shared Ownership. You can find a round-up of these on the Money Helper website.
If you’re unsure where to start, you can always get in touch with us to chat through your options and see if we have any additional advice or savings accounts that might be suitable for you, for example our First Home Saver account which, as you may have guessed, is ideal for first time buyers!
We’re not going to recommend giving up your favourite coffee or Netflix subscription as everyone deserves a treat. But we do recommend taking an evening or weekend to go through your bank statements and take a note of how much you’re spending and where.
It could be that you’re paying some extra interest on a credit card, there’s a direct debit you’d forgotten about, or you’re spending a lot on energy bills which could be resolved by making your current home more energy-efficient. All these small amounts can really add up, so it’s worth completing a quick review to see if you can make any quick changes.
The 50-30-20 budget rule was coined by an American senator and bankruptcy expert, Elizabeth Warren. The numbers refer to a percentage of your monthly income, divided into different categories. Here’s how you break it down:
Now, we understand that everyone earns and spends a different amount – which means this rule wouldn’t be practical for everyone. But it’s definitely worth assessing your spending (as suggested in point 2) then seeing how much you can really afford to save each month. You might be surprised!
If you’re lucky enough to have accommodating parents or relatives with available space, you could save a significant chunk of money on rent and bills by lodging with them. It might not be the ideal situation in the long-term, but moving into a shared family setting can really help you with saving your deposit and eventually getting a home of your own.
If you don’t fancy moving in with family, how about sharing somewhere with friends in a similar situation? You could consolidate two households into one, with a short-term let giving you a clear focus for saving and a deadline for finding somewhere of your own. You could even try a house-share in the area you hope to live to help you settle in before you commit to moving.
We hope these tips have been helpful and encouraged you to consider the best ways to save for a house deposit – especially if you’re trying to save in a short amount of time or while renting.
Please feel free to get in touch if you have any questions – our team will be happy to point you in the right direction.