Owning your own home is a massive dream for a lot of people. The journey to getting to that point can give you a lot of ups and downs. There are times where you feel elated, other occasions where you feel a punch to the gut. That dream is possible though, but you're going to have to work to get there. Whether it's a flat in the city, a cottage in the countryside or a semi detached house in the suburbs, saving that house deposit is one of the things that is going to get you to your goals. Let's have a look at how to save money for a house deposit.
Where Do You Want To Buy?
The first thing you need to do is figure out where you want to buy your property. There are many things to take into account when you are searching for a home to buy. The proximity to your job for one. Other things to factor in include schools, public transport and road connections. Don't forget amenities nearby, including shops and anything you enjoy doing like going to the gym. Open space might be on the wish list, as well as a safe neighbourhood. Try and figure out the best place for you to live so you can begin to look at properties.
How Much Are Properties Selling For?
The next step is to look at how much properties in that desired area are selling for. When you're looking at how to save money for a house deposit, you need to know how much the properties are selling for. Look for similar properties and the info that they have been bought and sold for. This allows you to figure out how much your house deposit would be. You'd usually need 10%, however there are instances where you can get a mortgage with a smaller deposit. Generally speaking, the more deposit you can pull together, the better mortgage rates you will get.
How Much Deposit Are You Going To Need?
When you know how much properties are selling for, you can figure out the amount of deposit you will need. Look online for prices that houses have sold for in the area and also how much the sale prices currently are. The actual prices that properties have sold for could hugely vary from the initial asking price. With the idea that you are going to need a minimum of 10%, you can do the maths of how much deposit you'll need. If properties are selling for £200,000 where you want to buy, you're going to be looking at saving £20k for your deposit.
Set Up An Account For Your House Deposit
A great tip when you're looking at how to save money for a house deposit is to have a dedicated place to save your money. Set up a separate savings account, so you can view your house deposit pot away from the rest of your finances. Help to Buy ISAs are no longer available however if you set one up before they closed, you can save into it until 30th November 2029. If you don't have one of those you could open a LISA (Lifetime ISA) where you can save up to £4000 a year and get a bonus of 25%. Having a place to save into away from your current account will help you to shift money around when you have it. Meaning it's in your pot for the specific reason, rather than a temptation to be spent.
Start Saving Into Your House Deposit Pot
Once you've got your house deposit account set up, you need to start saving into it. You might actually be surprised at how much you can save when you start focusing on it. To get to your goal of owning a house you're going to have to prioritise funding your house deposit pot. You still need to enjoy your life whilst you're saving and you'll still have things to pay for. However you decide that saving is more important than some spends.
You Might Have To Change Your Mindset
It could mean a change in mindset. One from spending what you want when you want, to saving because that will help you reach your ultimate goal. Our mindset is a tricky thing to change, we can be set in a routine which is hard to break. However when you change your mindset and make your goal the number one thing you want to work towards, the amount you'll find to put into your savings account might shock you!
Look For Mortgages
You also need to look for mortgages. There are some great mortgage offers at the time of writing this, but they are forever changing, with new offers coming available all the time. Depending on your financial situation, you might not find a mortgage that will suit. This is where mortgage brokers can come into play. They often have access to deals that you won't find by yourself. They are often worth their fee as they can find you a deal that works perfectly for you. This makes the journey slightly less stressful as you'll have someone else in your corner helping.
Put An Offer In
Once you have your deposit and have found the property you want to buy, put your offer in. There could be lots of other people interested in the house which can lead to plenty of bids. Try not to get too connected, even if you fall in love with the place and can see yourself living there. There might be someone who can simply pay more than you can for the property. There is no point in getting yourself into financial hardship for a house. You'll have to pay back your mortgage every month, so you need to be able to afford it. Take a look at how to negotiate house prices here.
Move Into Your Dream Home
Once you've found a property you love, put an offer in, had it accepted, sorted the mortgage and jumped through some other hoops, you will eventually get the keys to your new home. The journey can be a long one, one with tears and heartache, but also one where, when you get to the end of it and are standing at your very own front door, is completely worth it!
Releasing equity from your house can be a good way to save money and put down a deposit on another property. However, it’s usually difficult to do so without a lot of equity in your house.
The buy-to-let mortgage will be necessary if you plan to rent out your property.
This type of mortgage usually requires a 2% deposit, is usually interest-only, and usually has a higher interest rate. Before making this decision, it is a good idea to seek financial advice.
What do you need to do now? At what point during this process are you currently at? Now we know how to save money for a house deposit, those goals of owning your own property get ever so slightly closer. You're still going to have to work, put the effort in and sometimes fight to get to where you want to be. However, you've got the tools to get there. Keep going, you've got this.