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It seems at the moment that getting a foot on the housing ladder is an incredible feat. With house prices high, tax thresholds being frozen, the Help to Buy ISA scheme closed and rent being SO expensive, before you even get to the stage of needing a mortgage broker and adviser, just how are you meant to save up for a house deposit?
Unfortunately, with things the way they are, saving up your deposit may take more sacrifice and savvy budgeting than ever. But it’s not impossible!
Here are some tips to save for a house deposit in 2023.
Reevaluate your housing situation
With rent often being more expensive than paying an actual mortgage, it’s worth considering if you can find a way to lower your housing costs so you can put more money towards your savings.
This might mean moving back in with your parents for a while, choosing to become a lodger or renting a room in a shared house while you focus on saving up your deposit.
Use a LISA
A Lifetime Individual Savings Account can be used to put money away for later life, but can also be used towards a deposit for a house. To be eligible you have to be between the ages of 18 and 39. You can put up to a maximum of £4000 per year into a LISA and the government will give you a 25% bonus on your savings, up to a max of £1000 a year.
If you’re buying a house with somebody else you can both use LISAs to put towards the deposit.
If you can’t afford all the mortgage payments and deposit on a home, you could consider the shared ownership scheme, whereby you buy a share of a property and pay rent to a landlord on the rest.
You can usually buy a share between 25 and 75%. You’ll still need to pay a deposit – between 5% and 10% of the share you’re buying.
You may then be able to buy more shares in the property over time.
Become a better budgeter
While you’re trying to save for a deposit, you’ll need to become great at budgeting and keeping track of spending if you’re serious about saving.
Making sure you’ve got your finances all laid out and being totally aware of all income and expenses is key to managing your money in the best way and working out where you can and can’t cut back to make savings.
It doesn’t have to be complicated, setting up a simple spreadsheet is a good place to start, or even just getting out a pen and paper and noting everything down.
When you’ve got your budget laid out in front of you, you’ll be able to identify any areas where you might be able to make savings, for example cutting subscriptions you might not make the most of.
You can check your outgoings and do a price comparison online to see if you’re getting the best price for your utilities and services.
See saving as a bill
Once you’ve established how much you can save each month, try and see that amount as another bill. Set it up so that that amount moves over into your savings monthly, in the same way that all your other bills come out. This way you won’t be able or tempted to spend your savings.
Find ways to make extra
The sad truth is that sometimes there just isn’t enough money to cut back any further to make savings, so you may want to consider looking at ways to bring in some extra income.
There are lots of ways people are making money on the side that could be an option – for example pet sitting is quite popular, using your spare time to drive for Uber, utilising your exisiting skills to offer remote work as a virtual assistant, teaching English online in the evenings, selling and reselling – the list goes on.
It might take some effort and maybe more than a little sacrifice, but if you make saving for a house deposit an active plan and not just wishful thinking, you’re already part of the way towards getting those house keys in your pocket!