Saving up for a house takes a lot of time and dedication, especially if you want to become a homeowner as soon as possible. Depending on the type of mortgage that you’re going to apply for, and whether you’re going to be buying through a shared ownership scheme or not, your deposit could anything from as small as £5k to a much larger amount. And the bigger the deposit you put down, the smaller your mortgage amount is going to be.
Other factors can also get in the way of saving up for your dream home – paying off debts and making sure that you cover your monthly expenses can limit the amount of money that you have available to put away into savings each month. But with the right money-saving strategies in place, you can collect the keys to your new home in no time.
#1. Decide on a Budget
Before you even begin looking at potential homes to save up for, it’s important to decide on your overall budget for the purchase. This will help you determine how much you’ll need to borrow in terms of a mortgage, how much you’re going to need to cover the solicitor’s fees, and the size of deposit you’re going to need to secure your home. By figuring out how much you can afford to spend on a house, you can work out a savings target for your deposit. Then, use this information to decide how much you will be comfortably able to put away each month or week.
#2. Pay Your Debts Down
As a general rule of thumb, your housing costs should not be more than one-third of your total income. But, if you have other debts like car finance, credit cards or a loan to pay off, these can easily limit the amount of money you can afford to pay towards your mortgage – and the amount you can save up each month for a deposit, too. So before you start saving, it’s a good idea to consider paying down as much of your debt as possible first – this will not only take off some of the financial pressure but also help you secure a better mortgage rate in the future. The debt snowball method is a good way to reduce the amount you owe quickly – pay off the smallest debt first and then put the money you’d normally pay towards that towards the next largest, and so on.
#3. Pay Your Savings First
Many people will wait until the end of the month to see how much money they have left to put it into a savings account, but this isn’t the best way to go about it – most of the time you’ll probably find that you don’t have much if any money left over at all. Instead, if you want to get serious about saving up for a house deposit as quickly as possible, calculate how much money you can afford to put away each month and then pay this into your savings account before you pay anything else. It can take some getting used to, but after a few months, it becomes a habit just like paying your bills.
#4. Reduce Your Expenses
The lower your monthly expenses, the more you’ll have available to put into a savings account towards your future house deposit. There are many ways that you can do this – for example, shop at a cheaper supermarket to reduce your monthly groceries bill, pay off your debts with a debt consolidation loan to reduce your overall monthly payment to creditors and improve your credit rating, switch your energy provider, downgrade to a cheaper car, and eliminate any additional expenses that you don’t use enough to justify paying for them, like a gym membership that you only use a couple of times a month. Look for ways to reduce other monthly bills – if you live alone, for example, are you taking advantage of the single occupancy council tax discount? Are you paying for a pricey sky package – try Netflix or Now TV instead.
#5. Make Extra Money
Finally, finding a way to make some extra money you can put away towards a deposit each month is a great way to get on the way to owning your own home faster. Find a freelance gig – content writing, web design, graphic design or virtual assistant jobs can be done from home in your own time to bring in some extra money, or offer a service in your area like dog walking, pet sitting or home cleaning.
Saving up for a house deposit takes a lot of work and dedication, but with the right strategies, you can have the money that you need sooner than you think.
