5 Top tips to help you save up for your deposit

Saving up for a deposit is often the toughest part of getting onto the property ladder. However, there are ways you can boost your savings, without having to cut out too much of the things you enjoy, find our top tips to saving for a deposit below.

1. Set yourself a budget

Trying to save can take a lot of discipline, however, the best way to see your pile of cash grow, is to save a set amount each month. You should set yourself a figure that’s comfortable enough for you to commit to saving each month, without putting too much pressure on yourself.

So, for example, let’s say you need £12,000 for your deposit. Saving around £330 a month will see you reach your target in around three years. If that sounds like too much, you could aim to buy in four years by saving £250 a month.

To make your savings go as far as possible, you should research the different saving account options and pick a savings account that suits your needs best, with the highest interest rate possible.

Then set up a monthly direct debit or standing order so you save without thinking. Remember, you can always make extra payments or increase your monthly amount if you come into some money or get a promotion at work.

2. Research government funded help

Open a Lifetime ISA

A Lifetime ISA (LISA) is government scheme that’s aimed at people saving for either their first house or their retirement.

If you’re aged between 18 and 40, you can save up to £4,000 a year into a LISA while getting a government bonus of 25% bonus on top (up to £1,000 a year if you save the maximum amount).

You can claim the bonus each year until you’re 50, however you’ll have to pay a 25% charge if you withdraw and use it for anything other than buying your first home, unless you’re over 60, or terminally ill.

5% deposit

Many mortgage providers have products which allow you to put down a 5% deposit, rather than the traditional 10% or 20%. Although the deals may not be as good, if you’re starting to save from scratch, saving for a 5% deposit may feel more achievable and an easier goal to aim for.

Shared ownership

The shared ownership scheme allows you to part buy and part rent a property. This means that you get a mortgage for a smaller amount of the property value (between 25%-75%) and pay rent on the remaining amount. Therefore, with this scheme, you will need a smaller deposit than if you were only using a mortgage to buy the property.

Discover other government help to buy schemes that are designed to help people getting onto the property ladder.

3. Cut your monthly outgoings

Whether you’re partial to dining out in fancy restaurants or sipping cocktails in upmarket bars, there are lots of ways you can bring down your outgoings.

Shunning restaurants and takeaways in favour of fakeaways is a sure-fire way to save some cash. The same goes for inviting some friends round to your house rather than going on a night out, limiting your daily coffee intake to just the one cup before you leave for work in the morning or using sites like Vinted to make some money from selling old clothes that you no longer wear.

Can you make your own lunch, do without one of the streaming services, or hold off on upgrading your phone or even car for now? Take a look at your own personal spending habits and you could quickly save a large amount.

4. Reduce the cost of rent

If you’re paying out a small fortune on rent and bills each month, the amount you save by reducing the cost of rent will quickly add up after a couple of months. You could either look to move to a cheaper rental property or move in with friends or family.

Although the thought of moving back into your family home may fill you with dread, spending a few months with cheaper or no rent, could give you a crucial boost as you save up for your deposit. If you’re really lucky, you may even get a few home cooked meals out of it, or discover your dirty clothes magically appear washed and dried back in your room.

5. Get a gift from the bank of Mum and Dad

Getting help from family members can be a great way to help boost your deposit and while it may not be possible for everyone, if it is, it can help to get you on your way. A gifted deposit can be the easiest way for your family to help. A gifted deposit is a contribution to either, part or all, of your deposit.

You have to declare that you are using a gifted deposit to help buy your house, as your mortgage provider might have certain criteria or rules for you to meet. There are also additional checks that your conveyancer will have to complete, such as ID and proof of funds, so they’ll need to be aware of it as well.

After some more home buying advice?

If you’re looking for some more information on the house buying process, take a look at our handy first-time buyers guide. Or watch our short video to find out more about what’s involved in the conveyancing process.