How can I save for a deposit on a house?
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How can I save for a deposit on a house?
There are lots of ways to start saving money, some of the most effective ones include –
1. Reduce your rental costs wherever possible
2. Consider shared ownership
3. Make a plan and stick to it
4. Open a savings account
5. Ask for help if you need it
6. Earn on the money you spend.
Saving money can be hard at the best of times, but saving up a deposit for a house can be even harder. Most mortgage lenders will require you to have, on average, a 20% deposit for the house you want to buy, which is a huge amount of money. Having a savings plan in place can help you to build up your savings, and get you on your way to buying a house. We Buy Any House look at the best ways to save money for your deposit.
1. Reduce your rent.
First-time buyers will often look at moving in with parents if they currently rent a property to allow them to save more efficiently. Saving up for a house deposit while simultaneously renting a property can be incredibly hard work, so reducing rental costs is a great way to save money. Moving in with parents may not be an option for everyone, but there are other ways to reduce your rent, from moving to a cheaper area to sharing a house with friends to spread the costs. While this may not be an ideal situation, doing this for a year can allow you to save up much more money than you would have saved living on your own and paying full rent. If you already own a house, you might look into getting a lodger to help increase your income if needed.
2. Shared ownership.
A shared ownership property will let you buy a percentage of the property, meaning the amount will be lower. This results in your deposit being lower, making it easier to save the amount needed. This can be a great way to get on the property ladder. However, you will need to consider the other percentage of the property that you don’t own. You will still need to pay rent for this percentage, so you’ll be paying your mortgage and an amount of rent each month. Make sure that you can still afford this.
3. Make a plan and stick to it.
Take some time and plan your income and outgoings. Creating a spreadsheet is the easiest way to see this information clearly and ensure that the numbers are correct. Start with your necessary outgoings, such as rent, insurance, travel costs for work and bills etc. After this, track what you spend on non-essentials for a month. You’ll likely be surprised by what you spend, and will see several ways that you can start saving this money for your deposit. Cutting down on non-essential spending will help you increase your savings quickly – but make sure that you don’t completely cut out your non-essential spending if you don’t have to. Giving yourself a certain amount a month to spend how you choose will keep you on track, as stopping spending completely will be much harder and you’ll probably find yourself breaking the plan very quickly. Reining your spending in rather than coming to a complete halt will give you better motivation to stick to it.
Within this plan, you should start looking at how much you need to save to give yourself a timeframe. Make sure you know what sort of property you’re looking to buy, then start doing some research. Look in the area that you’re planning to buy in for houses similar to what you’re looking for and get an idea of the average price. You can then work out how much you need for your deposit and have an end goal. Once you’ve got that price, you can work out how much you need to save each month to buy when you want to, and get an idea of how realistic that is.
4. Open a savings account.
Talk to your bank and find out what they recommend for you. You want to find an account with a healthy interest rate if possible, allowing you to save your money and have the interest grow with it. Often these accounts will require the money to stay in the account for a certain amount of time to let the interest grow, but if you’re saving to buy a house this is likely going to be a lengthy process so should not be an issue. Do your research and see what sort of account will work best for you, and get advice from your bank along with a few others. Shopping around will allow you to find the best interest rate possible for your account.
5. Ask for help.
Saving the money needed for a housing deposit can be incredibly hard work for some, especially with housing prices so much higher now than they were in the past. More and more first-time buyers are receiving help from family members to get them onto the property ladder. Getting help from your family can help you buy a house much faster than if you were doing it on your own, but this will depend on your and your family’s personal circumstances.
6. Earn on the money you do spend.
There are several options out there, such as loyalty cards, cash back credit cards, and money-saving apps that will allow you to earn a small percentage of the money you’re spending in certain places back. Sites like Top Cashback can help you get money back on everyday essentials, and O2 have airtime rewards that will get you cashback for buying from certain companies, as do Lloyds. Some may only be 1% of the money you spend, but some go up to as high as 5% – and it all adds up when you’re saving. These options are great for essential spending and will give you a little extra to save.
The most important part of saving up a deposit for a house is to make a solid plan and stick to it. Spend some time outlining how much you need to save, when you want to have it saved by, and how you’re going to do it. If you already own a house and want to sell it to buy elsewhere, we can help. Get in touch with We Buy Any House today for a free cash offer on your house, and see how we can help you achieve your sale in as little as 7 days.Back to all articles
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