Smart Saving – Ideas to help you save for a home deposit
If you are a first time buyer, chances are your first home will be the biggest purchase you have ever made. Thinking about buying your first home can be daunting, particularly smart saving for a deposit, which usually needs to cover at least 5% of the cost of the property.
The amount you need to save for a deposit will depend on the purchase price of the home you choose, and the mortgage a bank or building society is prepared to loan you. Be realistic – there is no point in setting your heart on a property that is way out of reach. Discover how much you are likely to be offered a mortgage for, and work out how much you need to save for your deposit.
Here are some tried and tested ways to make smart saving less painful.
Change your living situation
This one might, in fact, be a little bit painful…but the potential savings are huge. You might be renting while saving up for your first home deposit, you are more than likely spending the lion’s share of your income on rent. If you have the option to move in with parents or other family (and assuming they charge you little or no rent) you could save hundreds of pounds every month and see your savings shoot up quickly.
If that is not an option for you, and you are living alone or with one other person, could you consider a larger house share where rents are usually lower? Could you move to a cheaper property/location – just for the short term to increase your savings? These are big lifestyle changes we are suggesting, however it could be worth it in the long term as it is this sort of action that will see you save the most money in the shortest time.
Reduce your direct debits
You will probably have a number of direct debits and standing orders set up to pay bills and subscriptions every month. Make sure you know what each one is for, what date it goes out, and whether or not it automatically renews after a set period.
- Switch your energy bills – it pays to shop around and companies normally have a switching service and will handle changing your direct debits for you.
- Shop around for car, pet, travel and house insurance – use comparison websites to get the best deals. Some bank accounts offer things like travel insurance or breakdown cover – make sure you are not paying for the same service twice.
- When your mobile phone contract is up for renewal, see if you can find a cheaper tariff
- Do you use that monthly gym membership? Are you watching enough on Netflix and Amazon to justify subscriptions for both? If you answer ‘no’ to questions like these, cancel them!
- Check your council tax payments – if you live alone, and in a few other circumstances, you may qualify for a discount on your council tax bill.
Make extra money
The key thing here is not to run yourself into the ground. But, could you pick up the odd extra shift and funnel your additional pay directly into your savings? Is there anything you could do on a freelance basis that might bring in some extra cash? (What used to be called a second job is now a side hustle apparently!) Think about your interests and hobbies – if you like photography, writing, sewing, baking, gaming – can you find a way to make money from it?
Do you have unwanted items you could sell – old phones, electronics, even clothes? You might be surprised at how much you could raise from selling old belongings, plus having a good clear out is energising!
Auto Smart Saving
Autosaving apps are useful if you are just starting to save, or have struggled to put money aside. The idea is that they save for you so you do not have to think about it. There are several different apps available – some calculate how much you can afford to save each week and automatically move money into a separate savings account, while others ’round up’ your purchases to the nearest pound and save the change for you. You always have the option to adjust the settings if money is tight during a particular month, and you can move the money back into your main account if you need to.
Watch your spending
An obvious one to finish on, but this is often where there are significant savings to be made, with just a little thought and preparation. Making lunches at home instead of buying lunch out, limiting what you spend on clothes and socialising, shopping at a cheaper supermarket for your weekly shop, cutting down on takeaways and eating out. Take a close look at your last few bank statements and identify where you could make these types of changes. Apps like Monzo can make this easier, by breaking your spending down into categories.
You may be doing all of the above and you still do not have that elusive deposit. Smart Saving does take time, so do not lose heart. Also, have you checked if you are eligible for home buying options such as Help to Buy? It is always worth finding out what assistance there is available. A member of our sales team can help if you are not sure whether you meet the criteria for any home buying support schemes. Do not hesitate to get in touch.