Mortgage deposit: How to save money for a deposit on a house while renting
We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
Saving money while paying your rent and bills is tricky. The typical first time buyer deposit for a house in the UK is around 15 percent of the value of the house. The average house price in England is £256,000, so you may have to fork out about £38,000 to be accepted for a mortgage. Express.co.uk chatted to the team at Offer of the Day to find out how to save money for a deposit on a house.
What’s mine is yours
If you are saving for a house with your partner or another person, you should think of your finances as ‘ours’ rather than ‘mine’.
The experts said: “Ultimately, there will be stages in your lives where you have differing salaries, outgoings and financial commitments.
“However, by building your savings together rather than separately, you will be able to build towards the goal of a deposit much more quickly!”
READ MORE- Martin Lewis urges savers to take advantage of the Big 6 ‘price war’
If you’re prone to treating yourself on pay day to new clothes, electronics, or furniture, you may want to reconsider this.
When saving for a deposit, it’s best to set a social budget to ensure you’re not spending too much.
The Offer of the Day experts explained: “When renting, there is a chance you will be living in built up areas, towns and urban cities, where the temptation to splurge on regular nights out (pre-Covid), takeaways and shopping sprees is all the more appealing.
“Try to set a social budget that can be used for treats, but make sure that savings are set aside on your individual pay days so you’re not tempted to dip into them every time you’re lured into a lavish spend.”
If you are saving with your partner, set a joint social budget.
Be aware of additional expenditure
You need more than a deposit to secure a house, so it’s important to do your research and find out what else you’ll need to spend.
The experts said: “Regardless of how long you’ll be planning to save for, it’s always important to bear in mind the additional expenditure that comes with buying a property alongside the initial deposit.
“As well as solicitors’ fees, there will also be council tax and insurance to take into account.
“It’s also worth remembering you’ll need to save up to afford the white goods that might’ve come as standard in your rented accommodation.
“Items like washing machines, tumble dryers, fridges, freezers and dishwashers don’t come cheap, so be sure to put funds aside for purchasing once you’re on the property ladder.”
How much deposit do I need to buy a house? [INFORMER]
Mortgage UK: The best UK cities for saving a deposit revealed [EXPLAINER]
Mortgage calculator: How much can I borrow? [INSIGHT]
Before you can move into the home you are saving up for, it might be worth living somewhere a little cheaper for the time being.
The experts advised: “If you’re determined to be a homeowner within a certain amount of time – but it feels as though your rent is currently eating up any chances of this happening – then it’s worth considering moving to a cheaper property or area in order to focus more attention on your savings account.
“Look to see how much money you could save by moving into a temporary house share, or consider cutting down on monthly bills by looking at one bedroom flats or properties further away from transport links or the town or city centres.”
Set a goal
It’s tricky to save money without setting a goal, and you’re more likely to cheat if you don’t have a number in your head.
The experts said: “It is so important to have a figure in mind because when a goal is in place it is much more achievable.
“If you have a complete understanding of your budget, then you may be able to set a goal, both financially and in terms of the time you want to move out.”
Assess your direct debits
Do you really need that gym membership? Can you cancel your magazine subscription?
The experts suggest cutting back on those needless direct debits to save for your deposit.
They said: “Everyone has direct debits that aren’t always necessary, and that you might not even realise are there.
“Consider how much use you are getting out of those memberships and consider whether the payments are justified.
“Some memberships could be totalling hundreds of pounds a year, so would be useful to explore that avenue of savings.”
Take advantage of all the discounts on offer in supermarkets and other stores while saving.
Be smart about what you buy and if you know you can get something cheaper elsewhere, do that.
The experts said: “A way to save some money is by rotating your home delivered food shop.
“Most supermarkets will offer discounts and codes for your first shop meaning you could get £10 each time.
“You can also make savings on your clothes orders; use discount codes and make the most of sales to increase your savings.”
You could download Honey, the free browser extension that searches for all possible discount codes at checkout when you shop online.
With tools like this, you’ll never spend a penny more than you need to again.
Source: Read Full Article