How to save for a house deposit
When you’re considering building a deposit, there’s never a bad time to start saving. Below you can find some tips on how to save money, reduce your regular spending and how to save for a house deposit:
Look at your debt payments: Before you think about buying a house, look at any outstanding debts you have and get these cleared up before you buy your first home. It’s a good idea to use any current savings to pay off these debts and then start fresh.
Open a savings account: If you open a separate saving account with a decent interest rate or a lifetime ISA (where the government may provide a 25% bonus based on what you put in), you can start to build up regular savings. On a more practical level, set up a direct debit of a set amount that goes into your savings when you get paid. This way, you’ll never forget to do it and can budget as if it doesn’t exist.
Budget effectively: If you look at your everyday spending and set budgets, you’re more likely to lower your monthly expenditure. If you eat out at restaurants or order takeaways regularly, set a monetary limit on how much you can use for these reasons and put that in a separate pot. Bank accounts such as Monzo have pots you can set up for this purpose, with real-time tracking and forecasting to see how much you’re likely to save.
Find an extra income stream: Whether you’re picking up extra shifts at work or finding a way of monetising a hobby, having extra streams of income make saving for a house deposit much easier. If you’re quite creative, you may be able to find a great way of making money from avenues such as arts and crafts and adding this to your savings regularly.
Utilise money-saving sites: There are a range of money-saving sites out there that can help you regularly top up your savings. Students often have discounts and money-saving vouchers that continue after you’ve left university which can help them start to build the foundations of a deposit.
Manage your savings account: Remember to always review your savings account each year to check you’re receiving the best interest rate. If you’ve opened a Lifetime ISA, make the most of the £4,000 allowance before the tax year ends and you’ll receive the maximum 25% bonus.
Consider affordable buying options: If you’re buying through an affordable home scheme - particularly shared ownership - you can heavily impact how much deposit you need to pay. Since with a shared ownership property, you only pay a deposit on the share of the property you’re purchasing, you may find your deposit is drastically reduced and much more accessible.