Many of us may feel the squeeze in 2022, especially with rising fuel and food costs leaving first-time buyers wondering how they can save for a deposit. With the average deposit hovering around 18% of a property’ purchase price – that’s almost £50,000 – it can feel like there’s a mountain to climb.
Saving is not impossible, however. The secret is getting into good habits and despite what the coming months may throw at us, you can squirrel away a tidy sum of money to use as a deposit. If 2022 is the year you’d like to take your first step on the property ladder, here’s what super savers are doing:-
They give themselves a deposit deadline
Savvy savers will be motivated by a deadline. Don’t, however, set a D-day and promptly forget about it. Diarise monthly ‘check ins’ to see how your fund is building and re-evaluate how much you need to save at the halfway point to avoid any shortfall.
They choose the right savings account
Shopping around for the best savings account is essential. ISAs are a tax-free way of saving money and they usually have higher interest rates than bank accounts. There’s even a product – the lifetime ISA (LISA) – specifically for first-time buyers saving a deposit. With a LISA, the Government will top up your fund, adding £1 for every £4 saved. In addition, money can’t be withdrawn for any reason other than for a property deposit or for retirement, removing the facility to raid the account.
They set up a standing order
Even the most disciplined of savers can forget to manually transfer money to a savings account. A good action plan is to set up a standing order that automatically transfers a set amount every month, without any action required.
They don’t deal in cash
The phrase ‘money burning a hole in your pocket’ is the enemy of the saver. If you’re ever in receipt of money – whether that’s a gift or when selling something – ensure the payment is made directly to or transferred quickly into your savings account to remove the temptation of spending it.
They live frugally, not lavishly
Saving for a deposit isn’t the time to live the high life. Short-term but impactful compromises may involve swapping the Amalfi coast for camping in Cornwall, luxury spa days for DIY facials and Michelin-star restaurants for stay-at-home suppers. Even switching a Costa cappuccino a day for instant coffee granules will help.
They sell, sell, sell
As the saying goes, every little helps so selling unwanted goods and gifts is a great way to swell the deposit savings. Facebook Marketplace, eBay, Vinted and Shpock are online platforms where it’s easy to sell clothes, homewares and collectables.
They start a side hustle
Smart savers are willing to go the extra mile in terms of income. If you’ve dreamt of starting a kitchen table craft business, have thought about taking part in market research or want to turn a hobby into a money-making side hustle, now’s the time to make it happen.
They bank what they save
There’s no ground breaking advice when it comes to saving money but the best savers bank what they’ve saved before it’s frittered away. You’ll reach your deposit goal quicker if you identify how much you are gaining by switching broadband suppliers, for instance, and amending your standing order by the same amount.
We’re here to help all first-time buyers, so get in touch if you’d like advice regarding deposits and starter homes.