How to save for a deposit

How to save for a deposit

If you’ve decided to buy a property, you’re probably thinking of how to save for a deposit. Generally, you’ll need at least 5% of the property’s price to be accepted for a mortgage. But, it’s important to remember that the higher the deposit, the better deals you’ll be offered.

Saving such a large sum of money can seem scary but there’s lots of things you can do that will not only help you to reach your financial goal sooner but also your new home.

Create a budget and stick to it

The first thing you need to do is look at your finances and discover how much you can afford to save.

If you know how much deposit you’ll need, divide it by how much you can afford to put away each month. This will indicate how long you’ll need to save for. The second thing you need to remember is to stick at it. Living on a budget may not be your first choice but remember it won’t be forever and it’ll be worth it in the end.

Cut back on luxuries

Cutting back on your daily takeaway coffee or meal deal may be hard to adjust to but you could save hundreds of pounds. Take a look at your outgoings and see if you could cut back on 3 things. Why not limit nights out, new shoes and beauty treatments?

Earn some extra cash

Selling unwanted clothes and belongings will not only provide you with extra cash but also extra space for your new home. Go around your property and create three piles; keep, sell and bin. By rule of thumb, if you haven’t used or worn something in the past year, you probably won’t miss it.

If you’ve got a spare room, you could consider looking for a flatmate. But, remember to check with your landlord if you’re renting.

Make the most of financial schemes

Help to Buy is a government scheme that offers a loan on new build properties with just a 5% deposit. Plus, there’s also LISA, which is a tax-free scheme that allows you to save £4000 a year and will reward you with a 25% bonus. Get in touch with your bank to see what schemes they offer.

Stop renting or look for a cheaper room

When you’re saving, monthly rental payments can be a burden. Why not see if you could move back home for a few months. If moving back home isn’t an option, look for ways in which to reduce your monthly payments such as downsizing to a smaller property or spare room.

Consider asking loved ones

If your parents are willing to lend you some cash, borrowing could mean you’re able to buy your own home sooner than you had thought. Discuss how much you want, how you’ll pay back and whether any interest will be added.

So, while saving for a deposit can seem like a never-ending challenge, the key is to start as soon as possible and save as much as you can. If you’re looking to buy a property in and around the Yorkshire area, get in touch today.