Are you a first time buyer looking at how to save for a house deposit? Before you start selling all your belongings online and stock up on baked beans, we share some of the ways you can make a sensible start when it comes to saving for a house.
Saving up for a house can seem impossible – until it’s done. You need to start by working out what kind of home you want, and how much you want to spend on it: are you looking for a flat, or do you need a house with a garden so Hugo the lab can pop outside to relive himself at midnight? Are you bound to an area, or could you look further afield where properties are cheaper? Working out your ideal property and location will help you set goals – remember you’ll need around 10% of the property price for a deposit, so if you’re looking at a £250K home, you’ll need £25K in savings PLUS moving/admin costs.
You then need to set a realistic target when it comes to monthly savings. Look at your monthly income, and work out how much you can save each month – then open up a savings account and put your monthly savings into it when you get paid so you’re not tempted to spend it. You can look at opening up ISA accounts, or talk to your bank about the best savings account for your situation – you can even make interest on the money you put it meaning a little extra for all the new home decor!
Next you’ll need to look at where you can cut down on spending – look at your lifestyle and make changes. Don’t buy clothes you don’t need, host dinner/drinks at your place and take turns cooking with your friends instead of splashing out on fancy restaurant, pause your gym membership and take up free online classes or go for a run around your neighbourhood. All the luxuries will come back – this is just temporary! If you can, move back to your parents home for a while – this will help you save MUCH quicker (trust us, we wished we listened to mum and dad in the first place!)
Keeping track of your budgets is just as important – use an app to help you keep on top of your savings. Apps like Moneybox nudge you to ‘round up’ online transactions to the nearest pound, and save the change. Once you see your savings start to grow, you’ll get hooked on trying to save where possible!
You can also have a talk with your parents and ask them to contribute to your first home in the way of lending you money for a deposit. Whether it is a portion of the cost, or the full deposit, work out together how you are going to pay it back so no issues arise later down the line.