Buying your first home is an exciting time, but saving enough money for a house deposit can be tough. The good news is that we’ve created this handy guide to help get you started.
Work out what you can afford
The first thing to do is work out what what type of home you can afford. You’ll need at least 5-10% of the house price to put down as a deposit, and there will be other costs as well such as solicitor fees and valuations. It’s important for you to consider whether you can afford to purchase a home on the open market, or if one of the Government backed schemes – such as Shared Ownership – would be better for you. For example, Shared Ownership only requires you to have a 5% or 10% deposit based on the value of the share, not the full market value.
Once you know this information, you will have a better idea of the size of deposit you need. It’s important to remember, that having a deposit does not entitle you to a mortgage offer.There are other factors involved such as your salary, credit history and your monthly outgoings. A Financial Advisor will be able to provide more information on what you may be able to afford.
Set a monthly savings goal
Now you know what you can afford, and the size of the deposit you need, you can set yourself a savings goal. Spend time reviewing your finances, your income and your outgoings, and see how much you can afford to save each month. To speed your savings up, look to cut down any luxuries. Do you really need that top TV package, or to spend £5 on lunch every day? Taking a packed lunch to work could save you almost £1,000 a year, or £2,000 a year if you’re in a couple. Our handy budget planner can help get you started.
Pick a savings account right for you
Deciding where to save you money could also play a big part in how long it takes you to save your mortgage deposit. Options available to you include the Help to Buy ISA, Lifetime ISA, Cash ISA or even just a regular savings account. All of these have benefits of their own, so it’s important you take some time to review these against your individual circumstances, to make sure you’re selecting the account which is best for you.
Automate your savings
Remembering to transfer money into your savings account each month can be challenging. Many people find it easier to set up a monthly standing order to automate their savings. This removes the temptation to spend the money, and gives you one less thing to worry about doing on payday too.
Check in on your savings
Seeing your money grow will provide you with all the motivation you need to keep saving. Sign into your online savings account each month to review your progress. It’s great watching your dream home become a reality.
Ready to get started?
Information on the Shared Ownership scheme and Help to Buy can be found on our website, or you can explore the types of homes available in your area by clicking here. You may also find our handy budget planner useful too.