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Beat generation rent – saving up for a deposit
In our blog last week, we told you all about what you’ll need to get onto the mortgage ladder. Now let’s take a look at how you can start putting some money aside to start saving up for that deposit.
Don’t panic and think of trying to save the whole amount at once, as realistically, unless you come into some money, that’s not going to happen. Remember – it’s a marathon, not a sprint and may take years.
When it comes to the end of each month, if you only ever have a few pounds left after you’ve paid all of the bills, you’re going to find it hard to start saving up for your deposit. Now, this may not be what you want to hear, but if you can, you might need to look at cutting back on your spending.
Don’t worry, we’re not going to suggest that you start living like a hermit, dressing in sacks and only eating dry bread, but there are a couple of expenses that you can start to look more closely at!
This isn’t going to get you a deposit overnight, but as they say, every little helps.
The best way to reassess is to print out your bank statements and sit down with a pen to take a look at any ‘treats’ you’re buying. Whether it’s a daily chocolate bar or coffee, a weekly magazine, or new clothes, is there anything you can spend less on?
If you’ve a bit of a magazine habit, just buy one once a month rather than every week, or take your lunch to work instead of spending £3 or £4 in the canteen every day. It might not be easy and you’re going to have to adjust to going without a few home comforts while you’re saving up. Whenever you’re finding it hard, just visualise what it will be like to live in your fabulous new home – it’ll be worth it in the end!
If you have a month where you have more cash left over, be strict with yourself and put it away.
For bigger savings, why not see if you can move back in with mum and dad for a while? Thousands of 20-somethings have boomeranged back to the family home, and saving money for a deposit is one of the main reason for this.
If you don’t fancy sharing space with your parents (or they don’t want you to move back!), you could save money by downsizing for a bit and moving into a smaller rented house or flat, or perhaps move into a house share to help cut costs.
One point to note on this is that you’ll need to take into account any extra costs – if it’s further away from work, will you have to spend more on commuting?
Can the government help?
As we mentioned in last week’s blog, if you’re willing to wait a bit, the government is set to launch Help to Buy ISAs in the autumn. These will let you save £200 a month with the government giving you an extra £50 on top of this. You’ll be able to save up to £12,000 out of your own pocket – meaning you could get a bonus of up to £3,000!
If you look at your finances and you really don’t think that you’ll be able to afford to save up a deposit and get a mortgage then maybe have a rethink. There’s really no shame in staying renting for a bit longer – it’s much better than buying a house only to find that you can’t afford to pay for it later.
Force yourself to save!
If you’re finding it difficult to save up by putting aside what you’ve got left at the end of the month, be strict with yourself and try a different tack. When you’ve been paid, take out the amount you want to save straight away and deposit it in a savings account. You’ll then have to live on the amount you’ve got left, meaning you’ll definitely save up!
Check with your bank or building society – some account providers offer savings accounts which allow you to set up “goals” so you can track your progress. This makes it easy to monitor where you’re up to with your deposit – and if you’re strict with yourself, you’ll be well on your way to buying a house in no time!