With the cost of renting almost as high as paying a mortgage, it can be an uphill struggle to save a deposit. Here are a few steps to help you save for a deposit:
1. Work out how much you need to save
If you’re planning to buy your first home it helps to know exactly how much you need to save. Having a target will help you to focus your saving and work out how much you need to set aside each month in order to reach your goal.
Have a look around the area in which you want to buy and work out what you’re likely to pay for a property. You can then work out how much you need to save for a 5% or 10% deposit.
Remember that it’s not just your deposit that you have to save. Other costs that you may incur when buying your first home include:
- Stamp duty
- Solicitors fees
- Survey/valuation fee
- Any mortgage fees that might be applicable
- Add your deposit to your total fees to work out exactly how much you need to save.
2. Reduce night outs
Recent research by a national bar operator revealed that on average 26-30 year olds spend £66 on a night out, and that 40% of young drinkers go out at least once a week. It may sounds fun, but that’s nearly £300 a month being spent. If you can abstain for a year, you’ll save on average approximately £3,000 (or if you’re a couple, £6,000).
But don’t feel you’re a party pooper. People are getting healthier and fitter at the moment and spending on alcohol and cigarettes is dropping fast – down by nearly half since 2000.
3. Pay down your debts
The general rule of thumb is that your housing costs should never exceed a third of your total income. However, if you have other debts, such as a car loan, student loans or credit cards, they could easily limit the amount of money you can put toward a mortgage. Consider paying down some of your debt first, which will not only help alleviate some of the financial pressure but also help you secure a better mortgage rate.
While it may sound counterintuitive to pay down debt in order to save, once those debts are paid off, you could have hundreds, if not thousands, of dollars freed up that can help you save faster.
4. Get a helping hand with your deposit
Getting a little help with your deposit can make buying a property more realistic.
Help to Buy scheme – Help to Buy is a government scheme offered by lenders in England on new build properties.
The scheme provides an equity loan that can be used towards buying a house, if you only have a 5% deposit saved.
You must be over 18 to qualify for Help to Buy, and it must be used to buy your own home on a repayment basis (not interest only).
5. Budget Wisely
Look for ways to trim your budget so you can put more toward your down payment. Here are a few ideas:
- Cut cable
- Pack your lunch
- Make coffee at home
- Cancel gym memberships
- Work overtime
- Start a side business
- Get a second job
And don’t forget you can get cashback paid into your Jeton account when shopping online and in store at a range of retailers (terms, conditions and retailer exclusions apply).