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Saving up enough money for a deposit can be one of the biggest hurdles facing first time home buyers in the UK today. With rising property prices stretching budgets to the limit across the country, pulling together 5-10% of a property’s value demands focus, discipline, and dedication to putting cash aside. The deposit alone on the average first home now exceeds £50,000 – no small sum for young people getting their finances in order while paying rent, utilities, and daily living costs at the same time.
Thankfully there are numerous practical methods for boosting savings to hit your deposit goals faster. Making changes to spending habits, finding extra income streams, and seeking out government assistance schemes can all help first time buyers build up their deposit funds.
Review Your Outgoings
The first place to start when looking to boost savings is analysing your current spending. Sit down and list all of your outgoings – essentials like rent and bills certainly, but also takeaways, gym memberships, streaming services and any other regular payments. Be ruthlessly honest with yourself about where your money goes each month. Once you have a complete list, identify areas where cutbacks can be made. Downgrading to a sim-only mobile contract, cancelling underused subscriptions, or simply cutting back on takeaways are all great ways to bank extra savings each month.
Shop Savvy For Groceries
Grocery shopping presents prime opportunity for savings. Try limiting expensive branded items and instead opt for supermarket-own brands – the difference in price can be dramatic, but the quality is usually perfectly comparable. Sign up for loyalty schemes to benefit from regular promotions and discounts. Plan out your weekly meals in advance and only buy what you need – avoiding wasting food is just as important as finding bargains. Batch cooking larger recipes on weekends can also help cut costs on busy weeknights.
Turn Your Spare Time Into Extra Income
Utilising spare time by taking on side jobs or monetising a hobby can bring in hugely valuable extra income to boost your deposit savings. Options like tutoring, freelance writing/design, delivery driving or selling handmade goods can work with even the busiest of schedules. As an added benefit, income from supplementary work is often tax free up to £1000 per annum. Setting aside just a few dedicated hours each week taps into an immensely lucrative source of savings potential.
Seek Out First Time Buyer Support Schemes
There are a range of national and regional schemes available aimed at getting first timers onto the property ladder by providing partially funded deposits. Helping hand schemes like the Lifetime ISA and Help to Buy: Equity Loan are certainly worth exploring by any prospective first home buyer, providing you meet the eligibility criteria. Many banks also offer competitive 5-10% deposit mortgages for which first time buyers may get preferential rates and terms over other applicants.
Turn Neglected Possessions Into Cash
Clearing through your home and listing unused possessions to sell online taps into dormant value just waiting to be turned into cash savings. Clothes, tech gadgets, video games, musical instruments – even furniture could sell fat car boot sales or sites like Vinted for hundred or thousands if no longer needed. For maximum returns, research item values carefully and clean/service items before listing across popular buy-sell platforms and social channels. Alternatively, simply holding an old fashioned garage sale generates quick cash even for lower value items.
Consider A Lifestyle Change
If you are a frequent spender on luxuries like dining in restaurants, multiple holidays annually and regular new clothing, redirecting this spending towards your deposit savings will make a significant difference. Not everyone will be in a position to totally eliminate luxuries, but considering conscious lifestyle changes like eating out less, trying staycations over foreign trips, and getting more wear out of existing wardrobe items can generate vital savings. Cutting back on pricy habits can also help – reducing your drinking and quitting smoking can be big money savers.
Move Funds From Other Savings
If you have other existing savings or are expecting imminent funds like bonuses or tax returns, consider diverting these sums into your home deposit savings. While it can be tempting to splurge unexpected lump sums, making the disciplined decision to plough this money into your biggest financial goal commands future returns the latest gadgets and getaways simply cannot match. Even relatively small windfalls invested today make a real difference to hitting your deposit target sooner through the power of compound interest in savings accounts.
Negotiate A Higher Salary Or Pay Rise
If advancing your career and increasing earning power feels possible in the near future, landing a promotion or negotiating an improved salary or pay rise has immense impact on deposit goal timelines. An extra few thousand per year speeds along savings. Before requesting more money, spend time clearly identifying and evidencing your value add and achievements, along with detailing additional responsibilities you could take on. If a promotion isn’t immediately likely, consider switching companies or industries to land a higher paying position.
Relocate To A Cheaper Area
While certainly not easily done, relocating outside cities and other high value areas can dramatically cut rental costs. Even moving a little further out from the centre of town or to the suburbs presents opportunity for lowered accommodation expenses. Crunch the numbers on transport costs and travel times to assess if commuting a longer distance could work out overall. The savings potential over just a year or two could run into thousands to redirect towards your deposit. Location flexibility is key for first home buyers restricted to tight budgets.
Take Advantage Of Government Schemes
There are a variety of national and local government schemes designed to help people buy their first home, assisting with saving for a deposit. Help to Buy ISAs add 25% extra when used towards a first time purchase, while the newer Lifetime ISAs offers attractive bonuses for those saving towards their initial property purchase. Some councils and housing associations also offer discounted Starter Homes for first time buyers with special terms and 100% mortgages removing deposit requirements. Research what is available in your area.
Buy With Family Or As A Group
Rather than buying alone, entering into property ownership with family members or a group of friends can make raising a deposit far more achievable. Combining savings and incomes lets you aim for a higher value property than buying solo. Joint mortgage arrangements also often allow access to better rates and terms. While co-owning does demand care around legalities, when done well it lets first time buyers step up on the ladder they’d otherwise struggle to reach alone.
Save Automatically
Automating your savings takes the effort out of manually moving cash each time you get paid. Most banks allow setting up scheduled transfers – pay yourself first each month by sending a fixed amount from your salary straight into your dedicated deposit savings account before you spend on anything else. Steadily growing savings by automation keeps the momentum up even during months where willpower may waver. Maximise interest by shopping savings rates for the most competitive deals.
Raising a Deposit is Achievable
While today’s property market stretches first time buyers to financial limits, raising a deposit is very achievable for determined savers willing to make lifestyle changes. Following the practical saving and money-maximising tips covered in this guide makes hitting deposit goals realistic without needing to wipe out all enjoyment of life in the process. Stay motivated by focusing on the end goal – your dream home and long term financial security. With some practical actions around spending, earning and budgeting creatively tailored to your unique situation, saving up your first home deposit can become a reality.