Saving for a house can seem like a fruitless endeavour these days with rising house prices. However, it does not have to be completely out of your reach. With a little bit of work and smart saving practices, you can successfully save for a house deposit. We have compiled 7 tips for how to save the money you need quickly.
1. Work Out How Much You Need
The first thing you need to do is know how much you plan to save. Look at house prices in the area you are planning to buy and use that to determine how much you need for a house deposit. Don’t forget to calculate stamp duty and fees for lawyers and surveyors too. Having a number to work towards will help you to count down how much you have saved.
2. Check If You’re Eligible For Government Assistance
The government offers a lot of help to first-time homebuyers in a bid to get more people onto the housing ladder. There are house deposit savings accounts called ISAs where the government will match a percentage of the amount the home buyer saves, tax-free. There may also be reductions in stamp duty or special mortgages you may be eligible for. Take the time to do some research to see if you can reduce the amount you need to save.
3. Create a Monthly Goal
A savings goal of tens of thousands can seem overwhelming, but if you break that down per year and then per month, it can seem more achievable. For example, £500 a month = £6,000 per year and £750 per month = £9,000 per year. These numbers are much easier amounts to work with.
4. Identify Areas Where You Can Save
When you are saving to buy a house, you may need to make some small sacrifices. Now that you have your monthly goal look over your spending habits for the last few months and figure out where you can save some money. Start off thinking big; cutting a weekly coffee is not going to do much. You might scale back your yearly holidays for a few years, opting for a cheaper option or cutting back the number of holidays. If you get a takeaway or go out for dinner almost every single night, you may consider cutting back to once or twice a week instead. If you go through a few bottles of wine a week, it may be adding up to thousands over the course of a year. Remember, these are not permanent changes; they only need to happen for a few years while you are saving money for a house. Here are some other things you might reduce or cut out:
- TV or entertainment subscriptions
- Look for cheaper options for date night
- Put spending limits on Christmas and birthdays
- Reduce spending on “extras” like clothing, household goods, and entertainment
- Reduce nights out or switch to more budget-friendly alternatives for catching up with friends. Go for a walk, host a games night, or go to a café rather than going for dinner and drinks.
You do not have to cut everything fun out of your budget; that will only make it harder to keep saving money for a house. Instead, prioritise your money, carefully pick the things you do want to spend money on and where you don’t mind cutting back. If you’re a vicarious reader, you may cancel your TV subscriptions and cinema outings and decide to spend £20 a month on second-hand books instead. If you’re a foodie, you might set a small weekly budget to visit markets and street food stalls so you can still try different foods.
Rent makes up a large portion of living expenses. Look at your current rent and consider if it is worth moving into lower-cost accommodation to help you save money quicker. This may be moving home for a year or two or moving into a smaller flat while you save money. While it might not be ideal, you and your partner may consider moving into shared accommodation rather than continuing to rent your own flat. This can reduce your rent cost significantly.
5. Sell Things You No Longer Need
We all accumulate a lot of stuff over time, and if you look around your current place, there is a lot of stuff that you may no longer need. Look at what you can sell to inject a little more cash into your house deposit savings account. Even a couple of hundred pounds will get you a little bit closer to your goal.
6. Bring In a Little More Money
If you cannot reduce your living expenses too much, look for ways to increase your income instead. You can do this by getting a second job if your lifestyle allows, or you can do odd jobs on weekends like walking dogs, babysitting, house sitting, or teaching a subject that you know a lot about. You do not need to earn another full-time income doing this and give up all of your free time, every little bit counts. £100 per week extra adds up to over £5,000 a year. £150 per week extra adds up to almost £8,000 per year. If you’re saving some money too, you will have a house deposit before long, especially if two of you are bringing in a little bit extra.
7. Consider Buying a Simple House
When people are saving for a house, they are often looking at buying their “forever home.” If you are buying your first property, you need to think a little smaller. The reason it is called a property ladder is because most people buy a small flat, and then after they have gained equity and saved a little more money, they then buy a house, and then they may move into a bigger house once they start a family. Start off with a flat or a smaller place first so that you can get on the property ladder. You will be able to save to buy a house much sooner, and your flat will develop equity while you are saving for the next place. The longer it takes you to save for a house deposit, the higher the chance that house prices will rise, and you will need to save more money.