How To Save For Your New Home
With the high cost of living and other commitments, it is hard to save up for a deposit in this day and age. Nevertheless, if you follow our simple tips and tricks you will be able to turn your dream house into reality, with much more ease.
The first major saving you’ll have to do is for your deposit. This is necessary if you want a good mortgage deal with low interest rates. The average first-time buyer puts down a 20% deposit on their first home. This could mean finding even as much as £50,000. You will have to figure out how much to save per month and in which areas you can cut your spending to make this possible. It’s best to build a habit and whenever possible add to your goal. This might take a long time, if you want to buy in three years’ time and will need £10,000: you’ll need to save around £265 a month. However, if you are only capable of saving £150 per month, you will have to save for around 5 years before you’ll have enough for your deposit.
Although the best method still remains to just save up for this amount by yourself, we know this might not always be possible. Therefore, we listed a few other options for reducing this initial cost.
You could get a joint mortgage with your partner, friend or family member. This might carry a few complications if one of the parties decides to sell or doesn’t pay their share.
Perhaps you can get some financial support from your parents that would provide you with a little bit of extra help paying your deposit. Their help can be both informal in the shape of gifts and loans to formal arrangements like becoming your mortgage guarantors. This means they will become liable for paying the mortgage if you can’t. This is a very serious commitment, therefore it is necessary to understand all the advantages and disadvantages coming with it. For more information visit: Guarantor Mortgages.
You may be eligible to buy part of your home and rent the rest. This could be possible if you have a household income of less than £80,000 (outside London) or £90,000 (inside London). This will reduce the size of the mortgage and deposit. You will pay less for the mortgage but you will also have to pay some rent.
You should also figure out the best way to store your money. A great option is to open a separate savings account. If you aren’t planning on touching the money you are saving for your deposit, than an account tying up your money but offering better interest is your best choice. You can use these 3 websites to find the best option:
Make sure you review your progress regularly to ensure you are on the right path and you are getting the best rate of interest.
Help to Buy is a government scheme offered by lenders in England on new build properties. This financial aid provides an equity loan that can be used towards buying a house if you only have a 5% deposit saved. To be eligible for this scheme you must be over 18 and it must be used to buy your own home on a repayment basis (not interest only).
From Little To Big
It’s easy to save a little everyday when you are being mindful with your money and conscious of your spending patterns. Areas you could start saving in are:
Shop at the right time! The ideal time to go shopping is an hour before closing time, or at 7 pm in 24-hour stores. This way you’ll find the most products in the reduced section. Freeze the items you purchased to prolong their expiration date and be mindful of how long you keep them for.
You can also check out Approved Food website for stock clearance food.
As obvious as it might seem, try not to shop on an empty stomach as you’ll end up buying things you really don’t need. Try to make a grocery list beforehand, which fits with your tight budget. You could even make a meal plan to make sure you will efficiently use all your purchased products.
Try own brand products as these tend to be the cheapest and you might be positively surprised with their good quality.
Don’t forget to set up loyalty cards everywhere you go! You can get some major discounts or even items for free.
Shop in Lidl or Aldi, there you’ll find the best bargains and brilliant deals.
Buy in bulk especially products with a long expiration date.
Don’t waste food! Freeze it or add a new ingredient if you are getting bored.
Before eating out check online if there are any vouchers available or discounts that apply to you. Unfortunately, you will also have to limit the number of times you will eat out if you want to save money.
Have some space in your garden? Maybe try growing some tomatoes 😉 Then just keep the seeds, replant and you can have a sustainable source of vegetables.
Cook from scratch: potatoes, pasta and veggies are some of the cheapest foods out there. You can save a lot of money eating a mostly plant-based diet.
Try to avoid shopping for therapeutic reasons. Try to purchase during sales and items that will last. Buying second hand is also a good idea. Here are some other hacks to save or even earn on your clothes:
- Sell what you don’t wear
- Swap and share with friends
- Buy out of season
- Shop online rather than in stores
- Re-purpose old clothes
- Borrow from friends and family
- Shop in men’s and kids section, for cheaper alternatives
Opt for entertainment at home or one that you don’t have to pay for. Fun activities which will also allow you to save money are:
- Taking walks
- Watching movies at home
- Inviting friends over
- Visiting museums, parks
- Doing at home yoga or other exercise routines
Save On Rent
Rent is probably your highest expense now and getting rid of it will drastically increase the speed at which you can save up for your deposit. Consider moving back with your parents or rent with friends to decrease the costs of living. You can get much cheaper options in shared houses, you can find some options on these websites:
Saving up for a deposit will take time and some dedication, however, in the end, it is worth it as you will be one step closer to owning your home.