No Widgets found in the Sidebar

When it comes to buying a house, the more you save, the better off you will be. With a healthy deposit, you can secure more favourable mortgage terms and conditions – and you will lower your monthly payments. But, as you know, this is easier said than done. In a time of sky high inflation and relatively stagnant wages, it can be difficult to make ends meet much less save over and above. Well… where there is a will, there’s a way. It may be challenging, but you can start now and make inroads towards your goal. In this article, we will provide 8 tips on how to save for a house.

How to Save for a House: 8 Tips

The cost of living combined with increasing house prices make it a daunting task to save and get on the property ladder. But it’s not impossible. The best time to start saving is now. How?

1. Start with a Goal In Mind. To put it simply, it is easier to get where you are going if you know exactly what your destination is. Ask yourself what type of property you want, what you can afford each month and how much a 5% or 10% deposit would be for this target range.

2. Cut Everyday Spending. No, one treat isn’t going to break the bank… but daily habits that seem small certainly build up. If you spend £5 a day from Monday to Friday on a coffee and a biscuit (fueling up for work!), £15 a few times a week on takeaways, meals out several times a month… All of these little expenses can add up to hundreds or even thousands of pounds each year. Don’t cut out all your fun but do look at where you can cut back.

3. Tackle Your Debts. Pay off any debts you can (try the snowball method) or renegotiate terms on bills and contracts. Every little bit of debt you pay off builds room in terms of how much you can borrow. 

4. Reconsider Your Living Situation. Average UK rents stand at £790 (£943 in London). This equals £9480 and £11,316 a year respectively. Consider your options: can you move in with family members for a short time while you save? Can you take on a lodger if it is acceptable to your landlord? Can you relocate to a less expensive area, change to a smaller studio or bedsit or move into a flatshare? 

It may not be optimal, but doing so can get you to your goals faster. 

5. Earn More. We get it: this is a tip that is easier said than done, particularly if you are already working full-time. To accelerate your savings timeline, though, consider a weekend job or something you can do on the side and/or from home. If this isn’t feasible, see what belongings you have that could fetch a good price online (try Facebook Marketplace). 

6. Save Smart. You may be eligible to open a Lifetime ISA account (you must be a first time buyer between ages 18 and 39). You can contribute up to £4000 a year and the government adds a 25% bonus to this (maximum of £1000).

7. Consider. Shared Ownership. First-time buyers can buy a share in a home and pay rent on the rest. This can be less expensive than renting an equivalent property, and you only require a fraction of the deposit that you’d pay on the market. You are only paying the deposit (typically 5% or 10% on the portion you are purchasing). 

8. Look Into Schemes for First Time Buyers. For example you can qualify for a Help to Buy: Equity loan from the government. This goes towards the cost of purchasing a new build home that costs between £186,100 and £600,000 (depending on location). 

You may be taking some of these steps: if you want to buy a home, now is the time to double down, so to speak. If this is your ultimate goal, go after it aggressively. When it comes to how to save for a house, there will be some sacrifice and even some discomfort at times. A flatshare, for example, may not be ideal (especially if you have loud or messy flatmates!) but it is a short-term tactic to help you realise your long-term dream. 

Leave a Reply

Your email address will not be published. Required fields are marked *