Introduction

Many individuals dream of transitioning from living with their parents or renting a place, to owning their own property. However, for first-time buyers, saving for a house deposit often presents a challenge. With the average house price in the UK sitting at slightly over £234k, and most mortgages demanding a 5% deposit, the sum to save can be substantial.

Given this, we present several strategies to gather the funds required to step onto the property ladder.

Examine your expenditures carefully when saving for a house deposit

You might believe you're living economically, but many individuals have areas where they can tighten their belts a bit. For instance, if you're spending £2.75 on takeaway coffee every workday, this accumulates to £55 a month, or an astonishing £3,300 over five years. Trimming these small expenditures can positively influence your finances. When it comes to applying for a mortgage, you can demonstrate a history of prudent spending.

Rent is a significant expense for non-homeowners. Although not the most appealing choice, moving back in with your parents for a year could allow you to save a considerable amount of money. The temporary loss of independence might be a worthwhile trade-off to escape years of renting.

Pursue a side job

A notable percentage of millennials are working full-time jobs and supplementing their income with a side job. These side jobs often allow them to express their creativity or interest, ranging from selling handmade items on platforms like Etsy to creative writing. If these aren't in your skillset, consider selling items on eBay, taking on evening bar work, or finding a job that accommodates your schedule.

Seek assistance from family when saving for a house deposit

Around 23% of first-time buyers have received help from their parents for their deposit. If your parents can afford to contribute to your deposit, it could significantly ease your path to homeownership. Nevertheless, you should consider the mortgage application implications. Mortgage lenders will want assurance that you can manage the mortgage repayments, and they will require a signed declaration from your parents confirming that the money is a gift, not a loan.

Even if your parents can't provide cash assistance, they may still be able to help you onto the property ladder. For instance, certain banks offer 100% mortgages secured against your parents' home. However, it is crucial that all parties research thoroughly before opting for such a product, as it represents a significant commitment.

Withdraw money from your account on payday

Rather than waiting until month-end to transfer whatever funds remain into your savings, consider a proactive approach. Determine your monthly living costs, leaving a small contingency fund, and set up an automatic payment for the remainder to go into savings on payday. This encourages prudent spending throughout the month and will help you in saving for a house deposit.

Relocate to a less expensive area

If rent and other living expenses consume your monthly income, moving to a cheaper location while you save for your deposit could be a viable solution. Over 300,000 people moved out of London last year, many of whom were young families. At the same time, cities like Bristol and Manchester saw increases in population. If you love your current location, identify what you value most about it, then seek those attributes in a more affordable place.

Safeguard your savings

With low interest rates, an ISA (Individual Savings Account) can be a worthwhile consideration. These products provide tax-free savings. If you opt for an ISA that penalizes early withdrawals, you will likely benefit from a better interest rate and resist the temptation to dip into your savings prematurely.

Purchase with a friend

The journey to homeownership can be challenging if you're single. Things are a little easier for couples with dual incomes saving for a house deposit, as they can save together and have both incomes considered when applying for a mortgage.

But co-ownership isn't restricted to couples! It could be a reliable roommate or a financially responsible friend you're willing to live with for an extended period.

There are numerous avenues to owning your first home. Whether it involves minor or major lifestyle modifications, reaching that milestone will undoubtedly be rewarding.

For unbiased advice for first-time buyers, reach out to our knowledgeable team at At The Place on 0333 358 0668 or email us at info@at-the-place.com. We're here to help you navigate this exciting journey.