Saving up for a deposit on your first house isn’t always easy. With most lenders requiring a 10% deposit on the house value for your mortgage to be accepted, you will need to create a clear plan to save up several thousands of pounds.
While this can seem like a daunting prospect, there are lots of small steps you can take to make this possible. If your dream is to get onto the housing ladder, then it may be worth some of the short-term discipline to make your longer-term goals a reality.
So, if you want tips on saving up for a deposit, keep reading.
Save money by flat-sharing
Sharing your flat/property with someone else will generally make it slightly easier on your bank account. You and your roommate can share the cost of bills, and rent will usually be cheaper per person, too. By cutting down your costs, you may be able to save more money towards your deposit.
Sublet a spare room
If you are currently renting a property and you have a spare room that could potentially be turned into a bedroom, then this is an option worth considering. Subletting your spare room is an excellent way to get more money in your bank account – and, in some cases, you may be able to cover the monthly rent costs completely.
Before you opt for this route, you should ensure that subletting is permitted in your tenancy contract. After all, you don’t want to be kicked out because you’ve broken the rules.
Increase your income
By negotiating for a pay rise or getting a second job, you can significantly increase your income. If it has been a long time since your pay rise, it is worth speaking to your manager about making this possible.
Alternatively, getting a second job may be worth considering for some people who are particularly determined to save up quickly for a deposit. Some common examples include being a delivery driver, selling items online, or dog walking.
While these side jobs may not pay as much as your ‘main’ occupation, you could save up quite a large sum over a long period of time.
Put money into your savings account as soon as you get your paycheck
As a general rule, putting money into your savings account as soon as you receive it is advisable. If you wait until the end of the month, you are far more likely to spend everything – and there may be nothing left to save.
If you get into the habit of doing this on the first day of each month (perhaps by setting up a standing order that does it automatically), you are far more likely to save consistently.
Ask your family for support
Not everyone is lucky enough to be in this position, but if you are, asking your family for financial assistance could make a world of difference. If you currently live with your parents, negotiating a reduced rent payment may enable you to save more.
Or, you could ask your family to support you with the deposit on the condition that you pay the money back to them (perhaps with interest) on the sale of the property further down the line.
If your family members are on the property ladder, then they may also have some useful insights for saving up for a deposit.
Cut down on your daily expenses
By reducing your living costs in small ways, it can make a considerable difference over a long period. Shopping for food in the ‘reduced to clear’ section, saving on petrol by walking instead of driving, or reducing your heating bills by using less can all add up. If you think of several ways to reduce your expenses and then remain consistent in achieving them, you may be able to save up for a deposit sooner than you think.
Keep living with your parents
In modern times, it is almost always less expensive to continue living with your parents. Therefore, if you are in your teens, twenties or even your early thirties, you may want to stay put for a while if saving up for a deposit is important to you.
With rent consistently being at least £500 per month and considerably more down south, your parents are unlikely to charge you this much. And, even if they are, you will likely save on heating, electricity and water expenses, as well as food and supplies, by living with them.
Consider getting help from the government
The UK government occasionally offers financial support to first-time buyers trying to get on the property ladder. One of the most common examples is the deposit unlock scheme, which allows you to buy a new build home with only a 5% deposit.
You may want to look into other initiatives, such as Rent to Buy and Shared Ownership. All of these can make a deposit on a property far more affordable – and may make your target deposit goal far easier to achieve.
It may be worth speaking to an expert in this area to find out which programmes are still ‘live’ and which may be most applicable to your situation.
Think about downsizing
If you are currently renting, then downsizing is a worthwhile consideration. Ask yourself whether you truly need all the living space that you currently have and whether a smaller property may enable you to save money on rent.
Similarly, even if you do not want to move into a smaller property, you may be able to find an equivalent one in a less expensive area. While this is perhaps not the ideal scenario, if you are serious about saving up for a deposit, then this should be treated as a necessary solution to save up the money you need.
Sell possessions that you no longer need
Do you have items in your possession that you do not want, use or need? If so, selling these belongings may enable you to save up to several hundreds of pounds (or more, depending on what it is).
Online marketplaces such as Facebook and Depop are useful for making extra cash – and while this may involve making difficult decisions about what to sell, you may be able to accumulate a reasonable sum of money by doing so.
Be realistic about what you can afford
While we almost all have a ‘dream house’ that we would love to move into, sometimes you need to be realistic about which neighbourhood is achievable.
If your parents raised you in an affluent area, then it may be desirable to buy a house in the same location (especially if it means staying close to your family and friends). However, getting onto the property ladder is notoriously difficult for a first-time buyer, and the size of the deposit that you need to put down will be much smaller in less expensive neighbourhoods.
Therefore, if you set your sights slightly lower, your deposit-saving target may become much easier to achieve.
If you want more guidance on getting onto the property ladder – for example, how long it takes to buy a house – then you are in the ideal place. Get in touch with Sold.co.uk today.
