5 Ways To Save For A House Deposit Without Realising.
22nd May 2021
22nd May 2021
Let’s face it, saving for a house deposit isn't easy, even if you’re buying in the cheapest parts of East London.
The average size of the deposit buyers I come across in London have to stump up is typically around 20%.
I come across many buyers that have made serious sacrifices in order to achieve their dream of homeownership. An understandable aspiration and so much tougher now from when I bought my first place almost 20 years ago.
This post isn’t about living on baked beans for the next 5 years, merely about making small adjustments to spending in order to save for that deposit without you really noticing.
Run On Autopilot
I know that if I relied on remembering to put money into a savings account each month, I’d forget.
Apparently, those that set up a direct debit into a savings account each month end up saving trice as much according to the savings app Chipp.
And with the new breed of banks – Monzo and Starling, you can ‘round up’. Spend £2.60 on a coffee and opt to round up to £3 to save a quick 40p with the theory being that all these 40p’s add up!
Lucky enough to have got a pay rise? Nice one, well done.
How about keeping your spending as is and putting that extra income straight into topping up your savings? Once you get a lifestyle you’re comfortable with, hide your savings and forget about them. But please, treat yourself to something; it’s surely deserved after a pay rise.
If you’ve not been offered a pay rise I’d suggest asking for one. You never know until you’ve asked.
The Obvious Ones
Still going to the gym at £40 per month?
During lockdown I started using the Peloton app like many others. I haven’t got the bike but use it for the incredible selection of classes to do at home. The instructors are amazing and all for around £13 per month. It’s a no brainer.
And I’ve just come to the end of my IPhone 2 year deal. I’m still happy with the phone and whilst an upgrade would be nice, my monthly bill has gone from £60 per month to £22.
Want Free Money?
Sure you do. If you’re a 1st time buyer and fortunate to be under the age of 40, you can set up a Lifetime Isa – known as a (Lisa).
I’m told by Vivek Madlani from Multiply AI, a Digital Advisor that you can put up to £4,000 into a Lisa each year until you are 50 and get a 25% bonus from the government, paid each month up to a maximum of £1,000 per annum.
If you put away the maximum over 3 years, your £12,000 magically turns into £15,000 thanks to the government booster and that’s before any interest or growth from your Lisa’s stocks and shares account.
Saving for a 20% deposit can be akin to staring up at Mount Everest from base camp. But there’s a new government backed loan scheme for borrowers with a 5% deposit.
However, I’d suggest trying to save at least a 10% to take advantage of the best mortgage rates on the market.
Wishing you every success.