So, you’re thinking of buying a house. You’ve chosen a, let’s say, interesting time to jump into the market.
There are a few variables to contend with when it comes to getting onto the property ladder at the moment. There’s still a post-pandemic buyer boom going on, while the government’s recent mini-budget has sent mortgage rates and house prices off in all sorts of directions. While you can’t control any of the above, one thing you can do is make sure you’re doing a good job of saving for your deposit.
The all-important deposit is the foundation of your house purchase. But, in the current, economically challenging climate, how do you go about saving up such a significant chunk of change?
How much do you need to save?
First things first, you need to establish a figure you’re saving towards so you can budget accordingly. For most people, their house deposit will be 10% or, in the case of some first-time buyers, 5% of the total house price.
Once you know your figure, be it £10,000, £20,000 or more, you’ll need to make a plan to get there. For the average person, that’ll mean a commitment to regular saving for the next few years, putting aside a few hundred pounds a month – or indeed whatever you can afford.
If you are looking at moving to a different part of the country, a great idea is to look at some reviews about the city or town. The eXp survey is a great resource for this.
How to save for a house
But how to get into that regular saving habit? Regular saving might seem like an alien concept to you if you’re used to effectively living month to month on your wage, but here are five ways to really start building a steady deposit fund:
- Reduce your everyday spending: if you haven’t reviewed your daily, weekly or monthly spending before, there will almost certainly be areas you can identify where you can cut back. Whether that’s the cliché of cutting out the morning Starbucks, taking your own lunches to work or seeking out Argos discount codes online to get better deals on your big buys, making a considered effort to reduce your everyday spending will help you see more of you wage at the end of each month.
- Get your bills under control: energy costs are another rather undesirable challenge for all of us at the moment. Although the government has intervened to ensure energy bills won’t surpass £2,500 for the average household this year, you can still do your bit to save money on your utilities as best you can. Seek out the best possible tariff you can be on and, as dystopian as it may be, invest in a nice warm blanket this winter that’ll save you sticking the heating on until you really need it.
- Get a hand from the government: if you’re a first-time buyer, you can take advantage of the government’s recently introduced 95% mortgage scheme, which means you only need to come up with a 5% deposit as opposed to the standard 10%. First time buyers looking to buy a new home can also take advantage of the government’s Help to Buy scheme, which offers an equity loan towards the cost of purchasing.
- Earn additional income: if you have the time, energy and desire to take on a few extra hours at work or start up a secondary hustle, that extra cash can go into your savings pot. Additional income can come from a variety of sources – a second job or selling your old clobber on eBay or Depop, for example.
- Look into shared ownership: particularly for London-based folk or indeed anyone looking to buy into an area that’s perhaps beyond reasonable affordability, there is the option to go into shared ownership. Shared ownership gives you the opportunity to buy a share in a property, then pay rent to the housing association on the remaining share. While you’ll likely want to buy a house outright, shared ownership allows you to put your rent money into something tangible rather than just your landlord’s pocket.
There’s no doubt that house buyers today face plenty of challenges getting a foot on the property ladder, but that means it’s more important than ever to practice good personal finance habits. With the property market set to be a financially steep one to get into over the next few years, make sure you’re doing everything you can to make your house deposit figure a reality.
