First-Time Buyers: Saving For a Deposit
You may be questioning whether you’re going to be able to save enough money for the deposit that’s needed if you’re a first-time buyer, or even if you’re moving up the property ladder and simply need to increase your current home assets and savings. This is particularly relevant if you’re doing it while in a cost-of-living crisis.
To assist you, we’ve put together some of the best recommendations to help you consider how you could reduce your current expenditure and help grow the extra cash you need to buy a new property.
Divide it and start a Lifetime ISA
To make saving money appear much more practical and doable, the first step is to determine the exact amount of deposit you’ll need, calculate the amount by which the Lifetime ISA can boost your deposit, and then break it down into smaller sums.
For instance, if you want to spend £150,000 on a home but need a 10% deposit, coming up with £15,000 may seem like an impossible task. However, if you qualify for a Lifetime ISA, you can get £1 for every £4 you save up to a maximum of £4,000 per tax year.
Therefore, you just need to save £11,250, not the whole £15,000 that is required. This would decrease to £5,625 if there were two of you saving money.
Keep track of all your purchases and savings.
Write down every purchase you make during a typical month, or use a bank like Monzo, which helps you to track your spending, including grocery shopping, car, outings with friends, gifts for loved ones, holidays and long weekends, and so forth. Managing this and making it a habit of keeping track of your daily spending can help to focus on the end goal, then challenge yourself to spend progressively less each month.
These days, high-street brand coffees cost about £4, while this might not seem like much at first, just one a day over the course of your workweek is £15. That works up to £60 a month and a staggering £720 per year, assuming time for holidays. Consider how much you spend each week on prepared foods and beverages and how much you could save if you simply bring your own from home. Things like taking in a reusable cup can help cut the cost of a coffee, as well as downloading their apps for loyalty points and rewards. Also using an app like ‘Too Good to Go’ where retailers heavily discount food approaching their sell-by date, so you’re not only looking after your bank balance but looking after the planet too.
Reduce your outings and instead have fun at home!
Would it be possible for everyone to save money by rotating who visits each other’s homes when you go out to eat, go to bars, or go to clubs with coworkers, friends, or family? This is not to say that you shouldn’t ever go out; just reserve it for rare occasions rather than making it a routine. You can always be a designated driver and not drink too much! Or plan nights out on the cheaper evenings, things like 2-4-1 Meerkat Movies in the weekday for cheaper cinema tickets, and knowing where the best happy hours are!
Take on some extra work
Even if you already work a full-time job, you might be able to earn some extra money by freelancing, working a weekend shift in a pub or café, or, if you enjoy going to the gym, working a part-time job there to reduce the cost of your membership. It can be a useful approach to help save for a deposit if you can figure out a way to make a passion into a source of income.
If you’re typically driving on your own, it could be difficult to persuade a housemate, partner, or family member to share a car with you for a year or two. However, doing so could save you money. Additionally, selling your automobile would be a simple method to increase your deposit amount. As an alternative, think about using a car sharing service like Zipcar.
In the long run, saving for a deposit will probably reduce your lifestyle, but if it just lasts a few years and results in you owning a property, it might be worthwhile.
To find out what you can afford locally and the level of deposit required for the type of property you’d like to buy, you can talk to one of our property experts who can explain local property possibilities and schemes to put you on the right path. They can assist you in figuring out how much of a deposit you’ll need to save and in understanding the opportunities available.