Saving up for a deposit to buy your first property can often feel like a very daunting task, particularly when house prices seem to be rising more and more each month. The Help to Buy scheme launched by the government last year saw the amount of first time buyers increase rapidly, but even 5% can be hard to save up for.
Saving up for a deposit can take years, but it is possible to achieve with a good plan in place, and when you can finally can afford the house of your dreams the waiting and saving up will all be worthwhile. Here are our tips for kick starting your house deposit fund:
Research Property Prices
The first thing you need to do is find out how much the flats or houses you are interested in will cost. Decide which area you want to live and do some house hunting, both online and offline.
Once you know what the average price of your dream house is, you can work out exactly how much of a deposit you will need to save up. It is important to look past the deposit though too, as there are many other costs to also take into consideration when buying a house and these will need to be budgeted for.
Add together your deposit, stamp duty, mortgage repayments and the other various fees involved and you should have a more rounded figure to aim for.
Look at Your Budget
Sit down and go through a couple of months’ worth of bank statement and really itemise everything on them. Think about all your different outgoings and prioritise them in terms of lifestyle.
Things like food and rent will obviously be costs that you cant change, but if you find that your gym membership really isn’t paying its way, or you have bought enough clothes for a new outfit every day recently, then you will see where savings can be made.
Open a Cash ISA
When saving for a deposit, you need to make sure you choose the best savings account available, that will let you pay into it with the best interest rate available. A cash ISA is perfect for this.
Using a cash ISA, you can now save up to £15,000 a year with all interest earned completely tax free. This means that while you are finding other ways to save up for your deposit, your cash ISA is also saving for you. Make sure to keep an eye on your savings accounts and ensure you always get the same deal you signed up for.
Set up a Payment
No one likes the standing orders and direct debits that come out of your account each month to pay bills and rent, among many other things. But when you are saving up for a deposit, it can be a really great way to get your savings on a roll.
Just put aside £50 - £100 of your wage each month and transfer it into your savings account, this way you will accumulate money for your deposit in a simple and efficient manner. Once you have set up the monthly transfer, you won’t even think about it until you go and check your savings and should be pleasantly surprised by the amount you have got.
Once you decide to buy a house, it can be easy to get carried away with all the planning and excitement. Unfortunately though, saving up a deposit takes time and you are not going to end up with a pile of money over night.
Make sure you keep an eye on the housing market so you can see whether property prices are fluctuating or not and if house prices do go up, you may just have to decide what is most important to you and whether you can compromise on the size of house you are after.