Top 10 ways to save for a deposit
Dom Beer and Chris Beer
Most people dream to one day own their own home, but with the constant rise in property prices saving for that dream home seems almost impossible, however here are a few techniques to make putting away those pennies slightly easier.
Cash ISA’s, Help to Buy & Lifetime
There are many benefits of these government schemes, but the main one is that you will receive a 25% tax-free bonus of your contributions towards the deposit of your first home! While both schemes offer the same benefit, they have numerous differences, so if you are thinking of using one (which I highly recommend!) then make sure to check out our article comparing the two here so that you know which is right for you.
Budgeting
Have a written budget planner for everything, and I mean everything. While I know this may sound mundane and restrictive, this will surprise you by how much you save on anything and everything and may even help you trace where last month’s pay cheque seemed to go.
Start with the food shop. How much do you usually spend? Does this sound like a lot? Do you shop weekly or as and when? Incorporating a sensible budget and a weekly shop can save you a lot of money in the long run – so long as you stick to it.
While budgeting seems like a mood killer, it does not mean that you cannot have fun, it just means you should cap your spending while having fun. Instead of tapping your card for every drink you buy out with friends, try taking a set amount of cash to last you for the evening and instantly you will feel more disciplinary with your spending.
The new car can wait
Maybe you’re thinking it’s time to turn in the beaten up old motor for something shiny and new with all the bells and whistles or maybe it just feels like it’s time for an upgrade and you deserve it. While this all may be true – is it necessary now? If so, get something cheap. A new car may give you the temporary buzz, but it will be a huge hurdle in your home saving and probably push the motivation for saving back even further.
… and so can that holiday
The same goes for a holiday. It seems like everyone is always on holiday and temptation kicks in to jump on the bandwagon; especially when you have all this money saved and you deserve a break. However, not only does this eat into your deposit, but it creates flexibility with your savings and this is dangerous in the long run. Try to view your savings as money spent and therefore not accessible. This will help keep the discipline when viewing that dream holiday.
Rent cheaper & save the difference
If you are currently renting then have a step back and evaluate whether you need to be spending that much each month and if you can compromise – temporarily – on your living standards in order to help put you closer to buying your very own home.
Once/If you find somewhere cheaper then instantly start putting away the difference in cost, as that £200 difference a month will make a huge difference going forwards.
Ask for help
Now I know buying your first home is a very personal thing and many feel they must put forward every penny themselves, however this can be extremely difficult. With the ever-increasing house prices and life getting in the way, saving all by yourself may be impossible, so ask for help. I’m not saying you should ask your parents for all of your deposit or ask the grandparents to buy your house for you, but just ask for a helping hand; even if it means temporarily borrowing the money in order to get your foot in the door (literally) and repaying it in the future.
Keep an eye out for deals
In line with keeping to a budget, keep an eye out for deals.
When it’s time to take on the big shop have a think about spending a bit more now to save for the future, for example, you may only need 1 pack of toilet roll now, but if there are buy 2 get one free, this could help you save in the future when you inevitably need more.
This also applies to more than just the food shop: car insurance, gifts, clothes, etc. Sites like topcashback.co.uk can help save a lot on the face value of items.
Sell stuff
This can help generate a lot more than you might assume so I would highly recommend sorting through your stuff and be strict with yourself when it comes to what you actually need and what can go and then begin listing. With sites like eBay, Gumtree, depop, Facebook Marketplace and much more you can easily get your unwanted in front of potential buyers as well as decluttering at the same time – a win-win!
How much do you really need?
Now this is probably the most important step of all – find out what you need to save. Having an actual target amount makes the journey that much more satisfying as you can see how close you are getting.
Talk to a mortgage adviser about what you can borrow, the amount you would need to save and realistically the property price you would be likely to achieve. You can talk to one of our team or read about mortgages for first time buyers here and how we can help.
Remind yourself why
To ensure that you stay focused and motivated every time saving becomes hard or feels a little bit stagnant, make sure to always remind yourself what it’s all for. Get on Rightmove and look at the properties you had your eyes on. Look at your rent leaving your account each month and remember why you wanted to buy a home. Remember the whole reason you wanted to start this journey.
About Beerstone
Beerstone Financial Services was established in 1996 by Chris Beer, our Founding Director, who still plays a key role in the company and ensures we maintain the best service.
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