How to Save for a Deposit in a Year
The average first-time buyer puts down a 20% deposit, which for many people means saving a whopping £20,000 or more! Saving for a deposit in one year may sound impossible. But no matter what stage of life you are in, there are steps you can take to save a deposit in a year.
However, with the right approach and dedication, you could manage to save the deposit you need in 12 months or less. Here’s what you need to know…
Save Money for a Deposit by Cancelling Your Holiday Plans
According to Lloyds Bank, the average person spends £1,400 going on holiday. If you’re a couple, that comes to £2,800 and if you have children, the price just keeps increasing.
While holidays are a great way to relax, they can add significantly to your yearly expenditure. So, if you’re looking to save for a deposit in a year, it’s probably best to cancel your holiday plans and add that money to your savings pot.
Consider Selling Your Car to Put Money Towards a Deposit
Unless your car is necessary for getting you to and from work every day, it may be worth selling it. Consider the amount you spend on car insurance, petrol costs, services, and MOTS every year – cars can be expensive! So, if your car is a luxury, consider selling it so that you can pot the extra cash.
Sell Unwanted Belongings on Ebay to Raise Money
The average home has between £400 and £1,000 of unwanted items stored within its walls. And if you’re saving for a deposit, that sum can add quite a lot to your savings pot. So, consider piling together your unwanted items and selling them on Ebay. You could make quite a bit of extra money and boost your savings total.
Get a Lodger to Contribute Your Towards Rent and Increase Your Savings
If you live alone and you have an extra room, consider taking in a lodger. Lodgers are a great way to help decrease your cost of renting, letting you put away more money every month. The easiest way to find a lodger you can trust is by asking friends or family members to move in.
By splitting the rent and the bills, you could get the extra money you need together faster than you otherwise would have.
Return Home to Live with Family to Save for a Deposit Faster
If you have good relationship with your family, it may be worth moving home for a time. Talk with them about how long you will stay, how much rent you’ll pay, and what you will contribute towards household chores and bills so that everyone is happy.
Living with your parents while saving for a deposit is one of the fastest way to get money in the bank. So, if you can put up with living at your parents, and they have space to put you up, it may be worth discussing with them.
Get Creative and Make a Second Income to Increase Your Savings
If you’re keen to save for a deposit in one year, it is important to consider creating a second income for yourself. This looks different for everyone. However, almost everyone can earn extra income alongside their day-to-day job. It may look like fixing cars on the weekend, cleaning people’s houses after work, freelancing on the side, or selling your artwork. But whatever you decide to do, having a second income is one of the fastest ways to increase your savings total.
Earn and Save the Commissions to Put Towards Your Deposit
If you work in sales, it’s likely you will be eligible for commissions. If you do get commission, we would recommend saving these and putting them towards your deposit. The more you make in commissions and the higher the amount you save, the sooner you will have a deposit.
If you currently work in a sales role and you’re not getting commission, ask if it is possible to. The worst they can say is no, after all.
Make a Budget of All Your Spending to Save a Deposit Effectively
Budgeting is one of the most important tips we can give you in this article. Knowing how much money you have coming in and going out each month is essential for your savings to grow.
By outlining your budget, you may be surprised at how much you could save by making a few simple changes, such as eating in more often, cancelling your gym membership, or perhaps even selling your car.
Move to a Cheaper Property to Save a Deposit Faster
Depending on your circumstances, you might consider moving to a cheaper rental property. Although the thought of moving may not be attractive, a cheaper property price could help increase your savings pot significantly.
If you have friends that have a spare room to let it is worth having a conversation with them. Alternatively, take a look on the following websites to find a cheap room to rent:
Don’t be afraid to find somewhere more affordable and bite the bullet. You could end up in your dream home even sooner.
Put Money in Savings Each Week to Reduce the Likelihood of Overspending
Setting up a savings bank account and putting money away each week is one of the best ways to save effectively. What’s more, if you set up a high-interest online savings account, your saving total will grow even faster. With good interest rates, you can make money while you save.
Consider Your Different Buying Options While You’re Saving
As the government works to make buying houses more accessible, there are so many different ways to get a mortgage. So, it is important to consider your buying options as, depending on the route you take, you could save yourself some money!
Get Your House Deposit from the Bank of Mum and Dad
If you have the option, it might be worthwhile asking the bank of mum and dad for a loan or a little extra cash to put towards your deposit. If your parents are in the position to help you out, it may be the best way to get your deposit together.
Consider Buying with Friends or Family to Reduce the Deposit Amount Needed
If you want to make buying a home more affordable, consider buying with friends or family. Buying a property jointly is a great way to get your dream home without a hefty price tag. Of course, this decision is a big one and you want to ensure you go into a joint arrangement with people you trust.
Consider Shared Ownership for a Smaller Deposit Size
If you rent a council property and have a household income of less than £80,000 (outside of London) or £9,000 (inside London), you may be eligible for shared ownership. This is where you buy part of a home and pay rent for the rest. Not only does this reduce the size of your mortgage, but it also helps reduce the need for a large deposit. So, you pay less and get onto the property ladder faster.
Take Advantage of the Help to Buy Scheme
If you’re looking to buy a new-build home, the help to buy scheme means you need a deposit of only 5% and the government can lend you the rest – up to a further 20%! This government loan is free for the first five years. However, you will need to pay the yearly fee from year six onwards. The help to buy scheme is only available for people looking to buy new-build homes.
Time to Get Saving! Save Hundreds Every Month with Our Tips
Saving for a deposit in one year is a big challenge, to say the least. It’s going to be time-consuming, probably a little bit stressful, and it will involve sacrifice. While not every one of these tips will appeal to you, they could still help speed up your time saving for a deposit. And once you get the keys to your new home, all the scrimping and regular saving will have been worth it.