People often say that saving up for your first house deposit will take you forever, you’ll need to save vast sums of money to do so and that you’ll need to completely rethink your lifestyle… in fact, that’s not always the case.
With help from homebuilder schemes such as Help to Buy, saving for a deposit can take a lot less time than you may think. For example, it could take you as little as 6–12 months to save the money needed for your first deposit. Below we’ll go through a few effective ways in which this can be achieved.
Use the resources available
If you are looking to maximise your savings towards that deposit for your first home, there are some really good assistance schemes out there to help you get there faster. For example, the Lifetime ISA or the Help to Buy: Equity Loan. This is when you are buying a new-build home from a Help to Buy registered home builder and you have 5% of your deposit saved. The Government will contribute an additional 20%. The Lifetime ISA contributes 25% of the savings you have made.
Another one is the Help to Buy: ISA. This is when you save the money for your deposit within a specific type of ISA account and the Government will top it up by 25%. As I’m sure you can imagine however these schemes do come with specific terms and conditions that need to be met, therefore, be sure to check online to see if you are eligible.
Stop renting
If saving for a deposit is your key driver then as I’m sure you are aware, renting a property can leave you with little cash at the end of the month to put into savings, then you may want to consider the following options.
Return home
This may touch a nerve with those who do not have this option, however, for those who do, it shouldn’t be overlooked as this could really help to boost your savings.
The Office for National Statistics states; “Young adults (aged 20 to 34) in the UK are more likely to be sharing a home with their parents than at any time since 1996.”
“There were 618,000 more young adults living with their parents in 2015 than in 1996–3.3 million compared with 2.7 million.”
Potentially negative comments from friends or colleagues should be ignored. At the end of the day (year), they may well be living independently and successfully in the eyes of society, but without their own deposit… Who wins?
Find a cheaper room
This works especially well for singletons and couples. The benefit of renting a room in a property, as opposed to the entire property can save you a lot of money. Bills, council tax and things like wifi and similar are often included.
Yes, you may well be sharing communal areas such as the kitchen, dining room and possibly bathrooms. However, the overall expenditure each month will be considerably lower than traditional rental arrangements. Also, moving into a shared house is cheaper and often more sociable, therefore not spending what you save on socialising is a temptation to avoid (too much of).
Here are some great websites to explore:
So, if you are willing to sacrifice your complete privacy for 6–12 months then this is a sure fire way to reach your saving goals and even have fun doing so.
Cut the cost of your rent
As rent and bills can be our biggest outgoing every month, lowering this amount is a great way to build your deposit fund. Below are some achievable ways of doing this.
Get a lodger
If you like where you live or maybe have ties to the area then you could consider getting a lodger. Having someone else help to pay the rent and split the bills with is a pretty popular way of building savings.
Tax-free income is one of many advantages of having a lodger. Under the government’s Rent-A-Room scheme, you can earn up to £7,500 a year in income from a lodger. This is equivalent to just over £144 a week.
Downsize
This may seem like a step backwards, for some, however downsizing actually has many benefits. Decide on how many bedrooms you actually need and the distance you are willing to travel to work, or not travel, as will be the case for many. Then base your search on these factors.
Looking for a smaller and cheaper property to rent, hopefully, closer to work, will reduce heating bills, council tax and other utility bills, as well as give you peace of mind when the end of the month comes around.
Become a property guardian
A great alternative to renting your own property while saving for a deposit is to become a live-in property guardian at one of the UK’s listed buildings. You may even find yourself living in an old castle or stately home.
It’s rarely free (even though they are out there), and you’ll be responsible for keeping an eye on the property and making sure it doesn’t go into disrepair. For those who that doesn’t phase, this is a great way to reduce your outgoings and save for a deposit.
Visit the Camelot website for more information on becoming a live-in property guardian and to look for properties in your area.
Budget wisely
Taking the time to set out clearly what you earn and the cost of all your regular outgoings could help you find areas to cut back on and save more money towards a deposit.
The most satisfying and least painful way to save is to make sure you’re not paying more than you need to for your gym, gas and electricity, mobile phone, TV, subscriptions and various insurances too.
Using useful and free tools that are available to us takes out the guesswork out and makes a lot of sense. Why not sign up for Duesday’s free app that helps you manage and control your household bills and direct debits, directly from your phone.
If you liked this then maybe you’ll enjoy our ‘best ways to become free of debt’
