The first step onto the housing ladder is always the hardest. With Halifax reporting that the average deposit for first-time buyers reached an eye-watering £32,899 in the first half of 2017, saving for a mortgage has never seemed a bigger challenge.
For young families with busy lives and mounting costs, finding that extra bit of cash to save at the end of the month can be a struggle, so we’ve compiled a list of tips to help make that dream house a reality.
Do the maths and make a monthly goal
Before you can start saving, you will need to work out what your monthly savings goal will be.
First, you’ll need to calculate your overall savings goal. Use a mortgage affordability calculator to discover the maximum you can afford to borrow, like this one from The Mortgage Genie. Buying your first home will typically require a minimum deposit of 5% of this amount.
Next, take a look at your monthly outgoings. Consider how much disposable income you have at the end of every month, and think about how much you could reasonably afford to set aside. This will be your monthly target. Try to make sure this goal realistic — if you find that you are routinely missing the target every month, then perhaps consider changing it to make it a little more achievable.
Don’t forget the hidden costs
When calculating a monthly goal, don’t forget that moving house will cost more than just the deposit. Throughout the buying process, you can also expect to pay for:
- Conveyancing fees: The fee your solicitor charges for dealing with the legalities of moving.
- Removal and storage costs.
- Broker fees: The fee taken by the people who arrange your mortgage.
- Lender fees: Mortgage lenders will often charge a fee for giving you a mortgage.
- Stamp Duty Land Tax: This is the government tax on all properties costing over £125,000. You can work out how much SDLT you will have to pay using HMRC’s calculator.
Try to find out what these costs will be early on, and factor them into your goal amount so that there are no nasty surprises before you get the keys. You can read more about what these extras are likely to cost, and how to budget for them, in our guide to buying a house.
Find alternatives to everyday products
Take an inventory of your monthly spending, and see where you can cut corners to save a few extra pounds. Buy own-brand supermarket produce, toiletries and cleaning products, and limit luxury picks to the essentials.
Think about which aspects of your daily routine can be substituted for something more budget-friendly — for instance, if you have a habit of buying expensive high-street coffees and paninis every day, then swap to cheaper packed lunches. Small changes like these will mean minimal difference to your lifestyle, but a big difference to your savings.
Find cheap and cheerful ways to have fun
It’s still important to find things you can do as a family, but you don’t need to spend a fortune on holidays and days out to do so. Try taking staycations: caravan holidays, camping, or even staying with relatives will give you valuable time to relax and have fun, without the price tag of a foreign holiday.
There are also lots family-friendly weekend activities which can help you save money without compromising on fun. Try swapping expensive hobbies, like eating out, going to the cinema or shopping, for free days out at a park or museum. VisitEngland has a list of free visitor attractions across the country.
Make every penny count
Simple, old-school saving methods like a family penny jar can be a surprisingly effective way to help meet your monthly goal. Empty your pockets and clean out the bottom of your handbag each week, and deposit any change you find into a penny jar.
At the end of the month, bag up the change and cash it in at your bank. Certain banks, including HSBC and Natwest, now offer coin-deposit machines in certain branches which will pay loose change directly into your bank account without taking any commission.
Use tech to simplify saving
There are a number of financial planning apps which can help streamline the process of saving. Apps like Money Dashboard and OnTrees will allow you to manage all of your accounts at once, which is particularly useful if you have multiple accounts with different banks.
They’re also an effective way to keep track of how much money you are spending on different utilities, and to keep track of how close you are to reaching your monthly goal. Most importantly, they’re also free to use!
Saving for a deposit can seem like an impossible task, but with some clever budgeting and a few simple substitutes, you can reach your goal in no time. Just follow our tips, and your perfect family home will soon be within reach.