So, in my last post, which can be found here, I mentioned that me and my boyfriend, Jay, have been trying to save for a 10% house deposit. Nihaad, over at the Little Blog of Stuff, asked what my tips were for saving for a house, so I decided to do a small blogpost on it! It’s a bit different from the sort of stuff I usually post, but it’s nice to mix it up a bit.
1. Work out who you want to live with.
I know it sounds straight-forward, but this is quite an important one! Obviously it’s easier to save if there’s two sets of wages coming in, rather than one. At the minute, Jay has a job as an engineer, but I’m still a student, and so I’m bringing in more debt than I am earning money. If you don’t have an other half, how about living with a friend, or a sister? My mum lived with her sister for a year in a house they bought together.
2. Research house prices in different areas.
I live in Chester, UK. If you take a look on the map, that blue dotted line is the border between England and Wales and Chester falls right on the line.
Chester is technically in England, but if I move a mile down the road, I’d be in Wales, where house prices are on average £170,000. In England, the average house prices at £190,000. It’s a small difference, but living in Wales really is cheaper, so for us, that seems like the sensible option.
3. Take up a government scheme.
In December, the UK is releasing a new scheme in which for every £200 you put into the account, the government will give you £50; that’s 25% interest!! They allow you to have up to £15,000 in the account, and it’s for first-time buyers only, who want a house under £250,000.
4. Work out your exact budget.
Sit down with whoever it is you’re looking to buy a house with and work out all the money that is coming in and out. How much can you afford to save every month? Remember be realistic. You don’t want to be searching for pennies down the back of the sofa to be able to enjoy life. Also think about what is realistic to stop spending money on. Buy lunch every day to take to work? Make it instead. Go to the cinema every week? Try once a month. It’s little things that can really make a difference. When I’m saving, I find whenever I don’t spend money that I usually would, I put it into the bank. For example, if me and Jay were supposed to go out for a meal, but decided against it, I’d put the £30 it would have cost me to eat out into the bank. Make sense?
5. Borrow from friends or family.
Okay, so I know this isn’t the solution, but me and Jay were surprised how many family members offered us money. Not to borrow but to keep. Half of our current savings were given to us by family, and we didn’t even ask for it. Borrow from your parents if you need to, and pay them back slowly, whenever you can.
6. Find the best savings account, with the highest interest rates.
If you’re saving for a deposit, you’re going to have a fair bit of money in one account. So, if you have £10,000 then 1% interest on that would be £100, which really is quite a substantial amount!
7. Set up a direct debit/regular payment to go straight into your account every month.
Set up a standing order, so that each month that amount goes straight in the bank before you can spend it.
We all hate bills, but we all know they have to be paid. If you treat saving like a bill by setting up a regular payment you’ll soon get used to not having the extra cash in your bank account each month.
8. Avoid renting!
I understand for some people this is impossible to avoid, and they HAVE to rent. When I finally graduate from uni, in June next year, I’ll be moving back home and finding a full time job. My parents have decided to start charging me £100 per month for my keep, to continue living at home. This is a no brainer for me. Would I rather pay £100 and live with my parents for an extra year while I save the deposit, or pay £500 per month to rent somewhere? I’d rather live with my parents and save that almighty £400 per month towards the deposit!
Something I’ve found really useful is this Mortgage Calculator. If you enter the likely property value, the size of the deposit you want, and the date you need your deposit by, it works out how much you need to save per month.
Me and Jay are looking to save £12,000 for a house worth £120,000. The calculator worked out we’d need to save £214 in order to save our deposit by January 2018.
I hope this helps some of you like me, trying to save to buy a place of my own!