Loads of us want to get on the property ladder, however the reality for a lot of people is that they simply cannot afford it. It’s too much of a stretch for some and for others they simply think they’ll never afford it. There are plenty of ways to get on the property ladder, such as help to buy. But however you choose to buy a house, you’ll need to invest some of your own money, so let’s take a look at how to save money for a house.
How Much Do You Need To Save?
The first thing to do is figure out how much you need to save. You’ll likely need around 10% deposit to get a half decent mortgage. Any extra percentages you can save on top and forward as your deposit will help you get a better deal on the mortgage terms and the amount you have to pay back. Consider the average house price in the area you’re looking at buying in. If it’s £250,000, you’ll need £25,000 as a deposit. If you’re able to save £30,000 or maybe even £35,000 you’ll be in a better position though. It’s also worth noting that you might even be better putting an extra pound down in your deposit amount. This could push you into the next bracket where you get better deals. So buy putting a deposit down of £30,001, you might save lots of money and be offered a better mortgage deal.
Budget Better
One of the best ways to be able to save money generally, whether for a house deposit or not, is to budget better. Making a monthly budget based on your actual income and sticking to it, allows you to shift some money from your current account into a savings account. It takes some getting used to, it’s a different mindset and way of looking at your money. You’ll soon start questioning whether you need that takeaway or new item of clothing. The likelihood is that it’s an impulse purchase and if your priorities are right and you really want to save money for a house, you’ll put that money into the savings pot and be happy in the jeans you have.
Buy Together
Are you able to buy a place with someone else? This way you’ll have to save less and also the mortgage payments will be split. Take into account the other person will need to be someone you trust. You’ll also need to make sure they don’t have any hidden debt. This could scupper your chances of getting a good deal. If you’re single person, buying with a friend or a loved one could give you the freedom you want whilst not lumbering you with loads of debt or overly expensive mortgage payments.
Take On Another Job
When you look at how to save money for a house, you might even consider taking on a second job. Maybe starting a side hustle in order to pump more money into your deposit fund? It doesn’t have to be long term but working a couple of evening shifts a week for six months could add a couple of extra grand to your savings fund. This could take you into the next bracket and help get you a better mortgage deal.
Focus On Your Current Debt First
Trying to save money when you have debt is like trying to collect water with a sieve. You’ll be moving money into a savings fund. However you’ll find yourself in more debt as interests mounts, as you can’t pay the debt off. You need to focus on the debt you have first, get that paid off and then start to save into a house deposit fund. If you manage to shift that debt you’ll also be looked at as a better potential customer by mortgage companies. Debts can affect our application so be sure to have them sorted out.
Where To Save?
If you opened a Help To Save ISA before they closed applications towards the end of 2019, you can continue to pay into that until November 2029. You’ll receive extra government payments on top of what you put away yourself. if you didn’t open one of those, you can open a Lifetime ISA which you can use for saving a house deposit. Check out all the details about the Lifetime ISA.
If you’re on a low income you might be able to open a Help To Save account which the government will add 50% on top of. Aside from these, be sure to put your savings into the highest savings account you can find. There isn’t much interest kicking about at the moment. Depending on what your situation is you could lock money away or choose to have easy access. Making your money work for you is important in the question of how to save money for a house.
Start saving for your house today and you’ll soon be in your own home.
