How to save for a deposit

Struggling to put money aside for that crucial deposit on a new home? Fear not, we’ve come up with 20 fabulous ways to save.

Don’t try them all; that would be extreme and we all have our own lifestyle priorities. Just pick out the ones that seems most relevant and achievable to you...

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1. Start saving now

There’s never a convenient time to start saving and it’s always going to be a sacrifice, so the only rule here is ‘the sooner, the better’.

 

2. Make sure you’re both saving

Many couples have a ‘bank manager’, the one who looks after the money. For this task, though, you both need to be on board. For two years, or however long this task takes, make sure you both understand where the money’s going.

 

3. Pay your house deposit first

Decide on a regular minimum saving and put it straight into your deposit fund every month with a standing order. Make saving a habit. Don’t wait until the end of the month, and then put in what’s left.

 

4. Have a separate house account

It’s a good idea to have a completely separate account for your house deposit, particularly if two of you are paying into it.

 

5. Make sure it’s earning interest

Preferably towards the top of whatever meagre interest rate is available. Shop around. Check if locking your money into – for example – a two-year bond, really is better than a good, flexible current account.

 

6. Allow treats

Be reasonable with your saving. A cheaper holiday is fine; no holiday at all is a bit miserable and won’t help your relationship. And remember the rule about rewarding yourself when you reach a savings milestone.

 

7. Be house-realistic

The first home you buy won’t be your ultimate dream home. And if house prices are rising – and they usually are – getting on the property ladder quickly is one of the aims you should bear in mind.

 

8. Be savings-realistic

Don’t save too much. Yes, a 20 per cent deposit would be great, but if a five per cent deposit is what’s required, that’s what you should aim for. Your savings project needs an end that isn’t a decade away.

 

9. Don’t dip in

Once the money is in your house account, you need to think of it as locked away. Only take money from this account as a very last resort.

 

10. Remember extra costs

As well as that deposit, you’ll need to pay for things like stamp duty, a survey, legal fees and the costs of physically moving your stuff to the new place.

 

11. Consider Help To Buy

Help to Buy is a loan scheme aimed specifically at homebuyers purchasing a new-build property. You can secure a Government loan for up to 20% of the price of your new home, which means you typically need a deposit of only 5%.

 

12. Look at where you live now

Is it as cheap as it could possibly be? Could you downsize? Could you live with friends / parents for a short while? What’s the cheapest way of putting a roof over your head(s) and could you stand it in the short term?

 

13. Downgrade your transport

Can you live with one car instead of two? Sell one now, and put the money straight into your house deposit account. Or change the £25,000 car for a £10,000 one, and deposit the difference. Also, if it’s a mile from home to work, don’t pay £20 a week in bus fares or all that cash on car parking fees. Walk. Or get off a stop earlier, or park in a cheaper place. Then walk. It’s good for your health/weight/back too.

 

14. Buy things you can afford now

Don’t go in for any more long-term finance schemes, whether it’s a car, a three-piece suite or a big-screen TV. Your mortgage is the only finance scheme you really need.

 

15. Clear your credit card debt

Do the sums: a credit card debt of £2,500 (APR 16.8%) over five years will cost £1,212 in interest – that’s half as much again.

 

16. Investigate the bank of family

Parents or grandparents may help with cash gifts, informal loans, or more formal arrangement. Difficult to ask directly about this, but make sure all relatives know you’re saving for a house, so they can offer.

 

17. Buy with friends or family

You can club together to buy a home jointly, but be sure to think through how this will work later on, when one of you wants to move on.

 

18. Make non-essentials ‘present-only’

We all buy things we don’t need, whether it’s black platform shoes or the latest black-hearted PC game. We don’t say stop buying them altogether, just try to restrict them to birthdays, Christmas and anniversaries.

 

19. Stop smoking and cut drinking

You know it makes health as well as financial sense. The two most expensive items in many people’s supermarket shopping basket are alcohol and laundry detergent. You can’t really stop washing clothes, but you could cut right back on the beer and wine. And tee-totallers, you could probably go without your over-priced sugary drinks too. And rip-off bottled water.

 

20. Write a “must buy” food shopping list...

...on your computer, and print it out every time you go supermarket shopping. Stick to it. It avoids impulse buying. And apparently the average UK home throws out £500 worth of food a year. And buy the cheaper brands wherever possible. Sometimes only your fave brand will do, but often you’ll be surprised by the cheaper version.