Are You A First-Time Home Buyer? Here Are 5 Easy Ways To Save A Deposit
For many first-time buyers, the biggest roadblock to getting on the property ladder is the deposit.
Contrary to what you might think, saving up for a deposit is not totally impossible.
However, it does take a level of self-discipline and commitment.
Unless you can access the bank of mum and dad or win the lottery, it won’t just materialise out of thin air. You need to be focussed. And this means making some decisions about how you manage your money.
But the good news is there are lots of creative ways you can save for a deposit.
How much exactly do you need to save?
To get a mortgage, most lenders require you to put down a deposit of at least 5% of a property’s value. And, they will then lend you the remaining 95%.
For instance, if you want to buy a property that costs £200,000, you need to save at least £10,000. This means you borrow £190,000.
In fact, most first-time buyers put down larger deposits. According to Halifax, the most common mortgage deposit for a first-time buyer is 16% which is on average around £32,321.
The benefits of putting down more than 5% include lower monthly repayments and a greater choice of mortgage products with lower interest rates.
The last thing you want to do is over-borrow only to then struggle to make repayments and be forced to sell your property to pay off debts you’ve incurred.
Here are five saving ideas to help you get your first foot on the property ladder.
#1 Work out your finances
Calculate your financial incomings and outgoings and log these on a spreadsheet. You should know exactly how much you spend a month on your rent, bills, direct debits, credit card repayments, groceries, clothes, books, going out, holidays, transport, and miscellaneous.
Identify how much you can set aside each month and set up a standing order into your savings account. Aim for 20% of your income.
#2 Stop over-spending
Go on a money diet and introduce regular spending freezes. Also, take one minute a day to check your finances. Keeping track on daily basis like this will give you greater awareness of how much money you have each day to use.
Identify areas you can save money. So, rather than eating out, eat-in. Ditch the gym member and take up running. Sell the car and use public transport or get a bike. Not only will you get healthy you’ll also save yourself lots of money. If you’re renting alone, downsize or move into a house share.
#4 Join the gig economy
Increase your monthly incomes by taking advantage of the gig economy. Rather than renting consider house sitting. Or, make extra money by blogging, dog walking, being a local handyman or handywoman.
#5 Move back in with the folks
If this is an option for you, set some ground rules first. Just because you’re not paying rent, doesn’t mean you shouldn’t contribute. So, cover utility bills or grocery costs. Decide how long you will stay and stick to it. Set boundaries or negotiate house rules that everyone is happy. Lastly don’t forget to communicate clearly so the arrangement works out for everyone.
Need help selling a property you can’t afford
If need to sell your home quickly to pay off debts, don’t worry. A company like House Buy Fast has lots of experience in buying properties for cash. So, you don’t have to wait weeks for your money, but rather it’ll be deposited straight into your bank account within days.