Saving Money For a Deposit – The Basics
Posted on Friday, March 27th, 2020
Saving money for a deposit on a house seems daunting, and that is because it is. As house prices climb, so does the price of your deposit. The average first-time buyer puts 20% down on their first home, making your deposit anywhere upwards of £20,000.
But how do you save up all that cash? It can take a while, but with perseverance and a set plan, you will be moving into your new home in no time!
Your Game Plan
So, you have decided to start saving for your deposit. First things first, you need to figure out your ‘game plan’. How are you going to save? Through an ISA? Borrowing from parents? Buying with a family member or friend? These are the things you need to think about as you start your saving journey.
Saving ISAs do not charge you tax on your savings, making it the perfect place to rabbit away money. Government-funded schemes, such as the Help-to-buy scheme, can help you get on the property ladder with a smaller deposit.
How Much Will You Save?
Even though you might not be sure how much you need to save for your future home, you can aim for a general goal to help your saving journey. For example, if you predict your max budget would be 200,000, you would need to save £20,000 on a 10% basis.
Whether you save £50, £100 or £150 a month, every little bit will help you to reach your overall goal.
Stick To Your Plan
When it comes to saving for a deposit, consistency is key. Continuing to save each month will help you to see a difference at the end of each year (or your target date).
Before you start to save, add up all your income and out-goings so you can see how much you can save each month. This will give you a rough idea of how much you can spare and how much you’ll have leftover every pay-day, avoiding small dips into your savings.
Cut Down Your Spending
Although it is said all the time, cutting down on little and regular purchases that could be avoided can really rack up the pounds. Just like that subscription you do not use anymore but cannot be bothered to cancel, or the daily coffee and muffin from your local coffee shop.
Little spends add up, so cutting down on unnecessary purchases will give you that extra change which will rack up month after month.
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Saving up for your first home can be a daunting task, and everything after that can be even more so. Stay up to date with our blog to find extra tips and tricks that will help you reach your goals.