Saving for a house deposit is one of the greatest financial challenges we face. But, there’s no way around it! To get finance on the home of your dreams, stumping up for a deposit is the first and most crucial step. Of course, it’s easier said than done, though. So what can you do to save effectively for a house deposit? There’s plenty! Here are our top 6 tips to get you started.
Before you start saving, you need a realistic idea of how much your house deposit will be
Saving for a house deposit is all about setting goals. So before you can start setting weekly targets, you need to know your end game: how much do you need for a house deposit? Finding that out means talking to a few different banks and lenders. They will all have different terms and conditions attached to their mortgages, including different deposits. Usually, though, it’s about 20% of the overall value of the mortgage.
Saving for a house deposit with pre-existing debt is much harder: try deal with old debts first
No one is too keen on debt. It can be a bit of a burden to say the least; but normally, it’s manageable. At the end of the day, debt is a necessary part of spending. However, you don’t want to overextend yourself. When you have a debt, it needs as much financial attention as you can give it. That means that pre-existing debts can really slow your progress on a house deposit. Our advice: deal with old debts before you save for a house deposit and take on a new one!
Try and come up with a second source of income to save for a house deposit – here’s how
Supplementing your regular income with a secondary one is a great way to take the edge off the cost of living. And by doing that, you can really fast track your savings for a house deposit. This could take a whole lot of forms, so you can get creative when it comes to looking for another income. Whether it’s a second job, or monetising a hobby that you do already, every little bit counts!
You can save a lot of money with good transport choices – savings that will help your house deposit
Transport takes a large part of our budgets each week. Getting to and from work costs more than most people realise. And that means it’s a great place to start your saving. Downgrading to a cheaper, and more fuel efficient car is one option. Riding a bike to work is another. There are so many ways to reduce the cost of your transport, and all are worth some thought.
During the saving stage, you need a firm budget – set a house deposit timeline and stick to it
We mentioned goals earlier, so let’s look at that a little closely. When you know the value of your house deposit, you can finetune your goals a little bit. Of course, the deposit remains your overall goal. But you can use that sum to work out how much you need to save each week. Based on that, you can set a firm budget. Stick to that, and you’ll know exactly when your savings will peak.
Finally, get rid of the credit card! Taking on more debt while you’re saving won’t help a house deposit
Finally, let’s talk more about debt. We know that pre-existing debts have to go before you start saving a house deposit in earnest. But future debts also need attention. And that places credit cards squarely in the frame: they need to go! Accruing more debt while you’re trying to save is going to make your job much harder. So kick the credit card and sail smoothly towards the house deposit you need!
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