Becoming a homeowner is undoubtedly one of the major milestones in life, and it is something that many people want to achieve. But saving for a mortgage can be challenging, given that the average first-time buyer deposit is more than £33,000. Here we take a look at some fantastic tips that could help you save up a deposit and move into your own home faster.
There is no doubt that one of the most important factors of saving money is having a goal in mind that you are working towards. Think about what is realistic for you – for example, could you, if you pushed yourself, save £500 per month? If so then you should set your target for the year at £6,000.
Of course, it may be the case that some months you don’t make the £500 target – but your goal will still be £6,000, meaning you will need to save more as the year goes on. If you have no goal then £500 this month can easily become £300 the next, and soon you have barely made a dent in the deposit you want to save.
Be realistic when you set your goal. Work out how much you are going to need for your deposit, and how soon you want to have it. You can then work out exactly how much you need to put away each month in order to manage it.
If you are a first-time buyer, then you may wish to look at the possibility of the Help to Buy ISA. This is a government initiative that has been specifically set up in order to help young first-time buyers get a foot on the housing ladder (keep in mind that you have until the 30th November 2019 to open an account). You can open an account with as much as £1,200, and then top them up by a maximum of £200 every month.
When you come to buy your property, the government will top up anything in your Help to Buy ISA by 25 per cent, up to a maximum of £3,000. So, this really can make a big difference to the amount that you can realistically save over this time.
It is the case that many people want to prove their financial independence and show themselves that they are able to afford a house just through the work that they are doing. But sadly, this is not possible for many people. The simple fact is that it is very hard to save up for a mortgage – and more than half of first-time buyers have to rely on support from their family members in order to make their purchase possible.
Don’t be too proud to accept financial gifts here. For your parents or anyone else who wants to gift you money towards your property they do so happily in order to see you get the place that you have been looking for. This is truly something that many people are having to do, so you are not alone in terms of where you are getting your money from.
For many of us, saving faster means making some sacrifices on our lifestyles. You might be surprised at just how much you spend if you really look at the numbers, so it is definitely worth taking the time to examine your bank statements and look at your recurring fees and subscriptions. Services like Amazon Prime, Netflix, Now TV and Audible might only be a few pounds, but add them up together and they make a significant figure.
Some social life activities can also be very expensive, and it all adds up. Really evaluate your essentials, for example, dinners out and takeaways could be replaced by home cooked meals. This can save you hundreds of pounds over a period of time, which can all be put towards your savings.
You should also track your spending on shopping, as this can be another place where we overspend. These bills can be reduced, you just need to be willing to make the changes.
For the majority of people, the largest monthly bill is rent. Logically then, this could be a place where you could reduce spending, and then save the rest of that money for your deposit. Whether you downsize your current property, or if you could feasibly move back in with parents for a short time, this could potentially allow you to save a lot.
This might not sound like a big deal but it can make a huge difference. It is simply human nature that if you wait to see what you have left at the end of the month – it will be far less than if you had saved a specific amount when you bank account fully stocked on payday.
Make an appointment to speak with our independent mortgage advisor about your deposit and what you could afford.
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