It’s no secret that saving for a deposit is considered the biggest barrier to securing a mortgage. With the cost-of-living crisis and the UK facing a recession, saving is more difficult now than it ever has been.
But it’s not all doom and gloom – although it can take a long time to save for a deposit, it is possible, and there are some tips and tricks you can keep in mind to speed the process up.
1. Have a realistic plan
Begin by working out how much you need to save, usually at least 5 – 10% of the cost of the property. Once you have figured this out, create a budget and try to stick to it as closely as possible. Take the time to understand where you might be wasting money on things you don’t need and where you can potentially make sacrifices that could amount to big savings!
Remember to be realistic about your savings plan, as you’ll only be disappointed if you can’t save the amount you want to.
2. Set up a direct debit to a savings account
To ensure you save a set amount every month, set up a direct debit for a specific amount to go into your savings the day after you get paid. That way, you can keep track of what you’re saving each month, and make sure you aren’t spending more than you’re earning!
3. Reduce your bills and try to cut down your day-to-day spending habits
Double check things like phone, broadband and car insurance bills to see if you could be getting cheaper deals elsewhere. It’s also worth double checking things like your council tax, as you could be paying a reduced rate if you live alone.
Your day-to-day spending habits are arguably one of the most influential factors in your ability to save. If you’re buying coffees every day or meal deals for your lunch, your outgoings are going to quickly rack up and you could be spending much more than you realise. Take some time at the end of each month to evaluate what you’re spending and where you could switch things up, for example by taking your own coffee to work instead of buying one. If you’re buying a £2 coffee every weekday, that’s roughly £520 a year!
4. Review subscriptions
Shockingly, an average British household wastes £170 per year on unused subscriptions. As a country we waste as much as £4 billion a year on unused gym memberships! It’s worth looking through your outgoings and determining whether you get enough use out of your subscriptions, or you might even still have some that you had forgotten about! Every little helps when saving for a deposit.
5. Think bigger
Although the above tips are actionable and will save you some money, the most impactful thing you could do would be to assess your current living situation. If you are renting a one-bedroom flat to yourself, the chances are you might not have a lot left over at the end of the month. Save more money by considering moving into a flat or house share, or find a lodger for your flat or home if you are able to do this.
Many people choose to move back in with their parents whilst saving for a deposit. This isn’t an option for everyone, but if you are able to, it’s certainly worth considering!
6. Consider other ways of buying
Saving a large deposit and buying outright is commonly seen as the only means of purchasing a home, but there are other ways of buying you might not have considered.
Shared Ownership is a fantastic scheme that allows you to own however much of your home you can afford to buy, and your mortgage is based on that share.
You will need to put down a 5% deposit, but this is only on the share you are buying, not the total value of the home.
It’s much more affordable than a traditional house purchase, and you can often increase your share up to 100% and own your whole home through a process called staircasing.
View our Shared Ownership plots here.
It might not be easy, but saving for a home is possible and there are plenty of small steps and changes you can make to get there. Do you have any other top tips for saving? Let us know!