Saving for a deposit is often the biggest challenge first time buyers face in getting on the ladder, especially when most lenders require a minimum 10% deposit.
Our guide helps you to work out how much deposit you will need and how to speed up your saving efforts to get that much needed deposit to buy your first home.
Before you start to save for a deposit, make sure you know how much you can afford and therefore how much you need to save. Not sure where to start?
It’s not a quick win and it involves sacrifice. But setting a budget and sticking to it is still one of the best ways to make sure you’re not spending more than you earn and identify possible savings. Take the time to sit down and work out what money you have coming in and where your money is going out. What can you cut back? Prioritise what you really can’t do without and what you may be able to sacrifice for a few months. How much could you save by cutting back? Look at your insurance policies and utility bills and use comparison websites to see if you can get them cheaper.
Savings rates are at an all-time low so scour the market for the best deals and take advantage of ISAs if you can.
We all know that Catch-22 situation: you can’t save for your own place because all your money goes into renting. If you want to break this cycle, chances are you’re going to have to compromise. Just 6-12 months of not renting and living on a budget could make a huge difference to your deposit. Here are some options:
While this won’t be a practical option for everyone, if your parents have the space, you get along and they are happy to have you then you’re just throwing money away not staying with them for a short period of time. Before you do move in though, sit down and discuss what financial contribution you will make, how long you’ll stay and any other ground rules they may have.
Perhaps you have a friend in a similar situation with a spare room. Why don’t you move in and halve both your rents?
Getting a room in a shared house rather than renting on your own will be cheaper and give you the chance to save up.
If you have a spare room yourself then this is a great way of cutting your rent. You will want to check with your landlord that this is acceptable. There are various websites that you can use to advertise your spare room.
Over the last few years the government has launched (and re-launched) several schemes aimed at helping people buy a home. Help to Buy (2021-2023) allows first-time buyers to buy a new build with just a 5% deposit and from April, 2021, the Mortgage Guarantee Scheme allows you to get a mortgage with just a 5% deposit. The 95% mortgage scheme will run for 18 months until December 2022. With Help to Buy coming to an end, the House Builders Federation has also developed Deposit Unlock to offer 5% deposit mortgages to new build homebuyers.
HS Homes of Solihull is a small independent estate agent based in Shirley, Solihull. If you are interested to know what your home is worth, call us on 0121 430 4448. Alternatively, click here to book a free market appraisal.
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