Getting onto the property market can be hard, but is a great achievement once you manage to do so. It can take years to save enough money that you have a big enough deposit to put down on a property, not to mention the required career progressions so that you can borrow more from the bank to buy your dream house. Luckily, there are many ways to help get the most of your money, from switching banks to a higher interest account and putting a plan in place, to setting up direct debits and looking at government schemes.
On top of saving for your deposit, you also want to be considering the other costs involved when buying as these can add up. Things to consider include solicitor fees, surveyor fees on the property, mortgage advisor cost (If they charge you, most are included within the mortgage) and the cost of furnishing the property. There are some calculators out there that help you learn about the full actual costs of a mortgage and calculate piti payments. Below are ten different tips to help you when saving for your deposit.
A Plan In Place
The first step when saving your deposit to buy a property is to put a plan in place. If you are buying with a partner, both sit down and plan on when you would like to buy your property. Try to make the plan realistic and make compromises with each other as you both may have different ideas. It’s important that once you have set out the plan, to try your best to stick to it as closely as possible in order to make it happen – if the plan is realistic, you shouldn’t struggle to achieve it either. The key to making this plan is to not rush it. Saving a deposit can take years so be prepared to make the plan longer than expected.
High Interest Bank Account
When saving for your deposit you will be saving a lot of money. In order to get the most out of the money you are saving, try and find a high interest bank account that you can keep it in. Interest rates aren’t the best at the moment, but 3% is better than 1% and every penny helps when saving for your new property. When looking for the best bank account for you, make sure you do a quick google search as there are many comparison sites that will show you the best rates available at the time of looking. You may also find some banks have some added benefits to them when joining, like phone insurance or home insurance once you have bought.
When trying to save for a property, one of the best ways of being consistent is to set up a direct debit into your savings account. At the end or start of each month your direct debit will kick in, sending a certain amount to your house fund. Try to set the direct debit as a realistic number as you want to be sure that you aren’t going to need to take the money back out. (Although it is there if there is an emergency and you really need it). If at the end of the month you have some money left over, you could then top up your savings with whatever you have remaining.
There are many government schemes out there that can help you get on the property market. If you are struggling to save or get on the market then one of the schemes may be able to help you. USDA financing is a great example of a government scheme designed to help first time home buyers purchase a house. With this, borrowers can avail of a loan without a down payment and they are less prone to risk since it’s backed by the government. Some schemes will offer you 25% extra on top of what you save every year to a set amount. Alternatively, there are other schemes that allow you to pay a lower deposit or to pay half rent half mortgage. If you aren’t sure of what scheme is best for you, speak to a mortgage adviser as they will be able to assist you with picking the best one for your situation.
Try To Pay Less Rent
If you are currently living in a rented apartment then paying the rent will reduce the amount you can save. If you can and want to save for your deposit quicker, then it could be worth looking to downsize and move to a property that will cost you less monthly. By paying less rent monthly, you can use the money you would have spent to top up your current deposit. This idea may not be ideal, but it would allow you to buy a place sooner which could be worth the sacrifice.
Move Back Home
Similar to the above, but if you parents live local to you and will allow you to live with them paying a reduced rent (Or in some cases none at all). Then it might be worth you arranging to move back in with them for a year in order to save for your deposit. This may be a short term loss for a long term gain, but by living back with your parents you should be able to save a substantial amount more than what you can do paying for your own rent monthly. This could mean you can buy a property 6 months sooner than planned, or maybe even a year sooner. It depends on how long you are willing to live with your parents for.
Sublet Your Room
If your tenancy will allow you to do it and you have a spare bedroom in your rented apartment, then why not consider finding a roommate. By living with someone else you will halve the amount of money you are currently spending. This could mean that you are able to buy even sooner as you can save the money that you are saving on by having a roommate. Plus, if the person you are letting live with you is a good friend of yours, then it might be good fun at the same time.
Find A Side Job
If you are serious about buying a property and would like to do it quicker than what you currently can do, then it might be worth finding a side job. Try and find a job that isn’t too stressful that you can do in the evening to top up your earnings. If you enjoy fitness, then you could look to become a personal trainer, or if you play a certain sport then why not try and start coaching it. Other ways could be doing surveys or renting out a parking space. There are so many different ways you can save up some extra money to help you buy a property quicker.
Reduce Your Monthly Bills
Do you have an expensive phone contract that isn’t needed? Or maybe you pay for a gym membership that you only use once a month? Do you eat out a lot instead of cooking for yourself? Or have you got any monthly payment that you are no longer using / may not realise you had? These are things that all cost and stop you from saving as much as you potentially could if you didn’t pay for them. This doesn’t mean you should stop having fun and paying for the things you enjoy, it just means you should look over them and be sure that you need to spend what you are currently spending. There are many apps that you can use to track your spending as well as certain bank accounts that also track what your monthly spend is.
Get Help From Your Parents
We mentioned above that you could move back in with your parents in order to save some extra money towards your deposit. However, depending on your parents financial position it could be that they are able to help you financially with the deposit. Maybe they could lend you the money and you pay them back over time. Alternatively, they may be kind enough to give you a lump sum that you don’t have to pay back. Don’t take advantage of this option as for a lot of people, their parents won’t be in that sort of financial position.
Overall there are many ways to help put you in the position to save the most to get your deposit for a property. That said, it will take you time to save enough money to buy so be patient and try not to stress too much about it, when it happens it happens – there is no rush. Just be proud of yourself that you are saving a substantial amount of money. Time goes very fast and within what feels like a few weeks, you will have saved enough money, decided whether you wanted a new build or old build, had your offer accepted and are counting the days until you move into your new home that you own.
What tips do you have to help save money for your deposit? Have you tried any of the above and they worked for you? Let us know in the comment box below, we would love to hear from you.