If only stumping up the cash for a property deposit was as easy as breaking open the piggy bank and counting your coppers. In reality, figures suggest a standard 20% deposit can take up to eight years to save, with the average UK deposit around £20,000. And, if you’re already renting, those kinds of sums can be even harder to achieve.
While there are no shortcuts or magic tricks available, there are some tactics that will make it a lot easier. So let s1homes guide you to saving for a deposit.
Financial check-up
When you decide to start saving for a deposit, it’s crucial to take a look at your finances. Be brutal when it comes to unnecessary expenditure. You may have to cut a few luxuries from your current monthly budget to start seeing savings results. This means things like holidays, shopping trips and frequent dining out so be prepared to make a few lifestyle changes.
Plan ahead
Once you’ve devised a budget, make a savings plan . . . and stick to it. Putting the odd fiver in a jar every week isn’t going to cut it. When it comes to property deposits, saving shouldn’t be sporadic. This will only delay the buying process and securing your dream home.
Instead, consider putting aside a lump sum every month. This way you can calculate how many years or months of savings is required with no nasty surprises.
It’s easy to set up a Direct Debit or Standing Order, too, meaning the cash will automatically head to a designated saving account or ISA.
Invest in the best
Don’t have a savings account or ISA? Well, there’s no time like the present! Savings accounts and ISAs keep your cash safe and often have attractive interest rates – particularly if the account doesn’t offer instant access. There are plenty of comparison sites online that can help you find the best deal for you.
Research schemes
Did you know through the Help to Buy ISA Scheme, first-time buyers will receive a 25% bonus from the Government of up to £3000? While all of these schemes come with their own caveats and small print, they’re definitely worth researching. You can also seek independent advice from mortgage and financial advisers.
Downsize
Does your current rental agreement and situation allow you to make the savings that you set out in your plan? If not, consider making changes. Can you downsize to a cheaper place? Are you able to take in a lodger to help with the rent and bills? Can you find a flat-share?
Rent and utility bills are usually the single biggest monthly expenditure a person has: find a way to reduce these and you could fast-track your deposit saving goals.
Ask for some help
The Bank of Mum and Dad (BoMaD) is an increasingly popular way for young people to accumulate enough cash for a deposit. Figures indicate a quarter of all property transactions in the UK are now dependent on parents. Arranging a loan with a family member helps boost the deposit pot without the high interest of a formal loan.
Start right now
Saving for a deposit while renting will naturally take longer, but don’t let that put you off. The sooner you begin planning ahead and putting money aside, the sooner you’ll be moving into your dream home.
Why not give your saving efforts a motivational boost by browsing the new properties available on s1homes?