Owning your own home is a huge achievement. With the cost of houses growing every year, it’s clear that not everyone will be able to afford this luxury. If you are determined to break free from the rental cycle and get on the property ladder, you’re going to need a deposit.
Most lenders will want you to put up between 5-25% of the value of the property. So for a property worth £180,000 this could be anywhere between £9,000 and £45,000. Unless you have a generous family, chances are you’re going to have to knuckle down and get saving. But what’s the best way to achieve this?
1. Save at the start of the month
Don’t rely on your own willpower to stick to a budget and then save what is left in your account at the end of the month. Instead, put money into your savings account at the start of the month so that you won’t be tempted to touch it. This has been proven to be one of the best ways to get into the habit of saving. Once you have paid your bills and put away some savings, you’ll have a more realistic view of what you have leftover for the rest of the month.
2. Make a budget and stick to it
First, you need to find out what is going into your account and what is leaving your account every month. Look at your bank statements and be honest with yourself about where your money is really going. Are you spending a fortune on lunches every day? Are your weekend plans putting a strain on your finances? Or are you booking too many holidays every year? Once you know where your money is going, you can create a realistic budget and then stick to it.
3. Declutter and sell items
Most of us are sitting on goldmines and we don’t even know it. Your house could be filled with things that you no longer use anymore but that someone else could get some use out of. You don’t have to set up a car boot sale stall at the crack of dawn on a Sunday. Use sites like eBay and Facebook marketplace to sell your unwanted items. And any money you make from the sales should go directly into your savings account.
4. Work with a mortgage broker
Some lenders will be willing to accept a lower deposit than others. Every lender has their own rules and regulations, so if you want to make your current savings go a little further, it’s worth looking around. A site like Niche Mortgage Info will connect you with lots of different mortgage brokers who will be able to look at your finances and tell you the right way to move forward. If you have a strong credit score and a well-paying job, you could secure a 95% LTV mortgage by approaching the right lender.
5. Set your sights lower
If you’ve saved a decent amount of money and you’re keen to get moving, you could boost your deposit value but setting your sights on a lower value property. Starting at a lower entry point will effectively boost the amount of deposit you can offer.
Think about what you are looking for in a home and then try to figure out what you can do without. For example, choosing a 2 bedroom apartment instead of a 3 bedroom house could mean a huge difference in the value of the property. You could always upgrade and move on in a few years when you’ve had a chance to save the additional deposit.
