Are you keen to get on the property ladder or move to a larger property? Here are some simple money saving tips to boost your deposit fund.
It’s nearly 25 years since I bought my first flat, and almost 20 years since I sold it. It was a little one bedroom ground floor flat in the village where I grew up.
Out of interest, I took a look at how much it would be worth today, and found that it’s risen in value by around £70,000 since I sold it. I can’t believe how much house prices have risen over the years!
Whether you’re hoping to buy your first home, or planning to move up the property ladder, chance are you will need to save for a deposit.
According to Which?, half of first time buyers put down a 10% deposit when they apply for their mortgage. And if you can save more than 10%, you may be able to access better mortgage deals.
Saving a deposit for your first home can be daunting, but there are some easy steps you can take towards saving the amount you need.
Here are some practical tips on how to save for a deposit for a mortgage:
Work out how much you need to save
Before you start saving, work out what your target amount is. Are you going to save 5% of the property value, 10% or something more ambitious?
Having a target amount will help you to stay motivated when you start to feel like you’d rather blow your savings on a holiday.
Pick the right savings account
After all your hard work, you want to be sure that your savings are working as hard as possible for you. Take time to look around at the options available, whether that is a high interest savings account or an ISA.
Be sure to read all the small print for any account you choose, and take independent financial advice where necessary.
Set up a spending diary
After that, it’s a good idea to keep a spending diary for at least one month, so that you can see exactly where your money is going.
You can stay low-tech with a notebook, set up a spreadsheet, or download a savings app to your phone to help you keep track of your spends.
Check your household bills
Go through your diary and see if you can make savings on your household bills.
Do you really need all of those cable TV channels? Are you getting the best deal on your contents insurance?
You may be surprised at how much you can save each year.
Cut down on luxuries
Cutting out cigarettes and alcohol is easier said than done, but it can really help to boost your savings each month.
And while I’m not saying that you have to become a hermit while you save for your deposit, cutting down on takeaways, nights out and meals at restaurants will help as well.
Make money by decluttering
Take the opportunity to raise some money by selling off unwanted items at a car boot sale or on a selling website.
Those DVDs and books gathering dust could help you to add to your savings fund instead. And as an added bonus you’ll have less to pack up when you finally reach moving day!
Look into downsizing
Rent takes up a large chunk of many people’s budgets. So finding ways to reduce your rent could be a great way to free up cash for your deposit.
Can you move to a smaller property, or relocate to a cheaper area? Or could you look into sharing a house or taking in a lodger? But be sure to check the terms of your rental agreement before you sub-let.
The short term pain of living in a smaller property will be worth it when you reach your savings goal for your deposit.
Keep yourself motivated
Making long term lifestyle changes can feel like a bit of slog sometimes. Keep looking back at your target to remind yourself why you are doing this.
Having a picture of the kind of property you want to buy can be a visual reminder of your end goal. And setting up a reward for reaching certain targets can keep you going when the going gets tough.
Just don’t blow all of your hard-earned savings on the reward!
You will have to make lifestyle changes to save a deposit, but it will be worth it when you get the keys to your own home. What are your best money-saving tips?
This post is for information purposes only and does not constitute financial advice.