Saving A Deposit For A House 9 Great Tips

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Saving a deposit for a house was the best year of saving I have ever managed. I never thought it would be possible to save so much.

Everyone knows how to save money but I truly believe when it comes down to it not many people are very good at it. The main reason most people fail is down to a lack of planning.

There are of course other reasons for being poor at saving money but when it comes to saving for a deposit on a house you need to be focused and ready for a long ride.

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Table of Contents

MY STORY:

Saving money for a deposit on a house is extremely hard. In today’s financial climate, it can be potentially impossible for young adults.

A lot of people at my place of work are in their late twenties and early thirties and still have no idea how they are going to get on the property ladder.

In 2013 my wife and I were looking to sell our first property and due to the poor state of the housing market at the time that we brought (2009 Crash), this meant that we had no equity left in our property.

This meant that for us to get a 3-bedroom house which is what we required at the time we would need at least a 10% deposit.

Prices at the time for a property with the size we needed meant that we would need a bare minimum of £20,000.

When you bear in mind that we still had a mortgage to pay and bills, we were also both working full time and therefore needing to relax at weekends etc this was a task that needed some forethought.

So we came up with a plan to save our asses off and the tips below are ones we implemented to save £22,000 in 12 months.

I also fully appreciate that not everyone is fortunate enough to be able to save that much. We now live in a time some 10-odd years later where financial hardship is far greater in the UK than it was when we were saving a deposit for a house.

BUDGET PLANNER:

We realized early on that simply putting money away wouldn’t work. We needed some kind of structure otherwise we would be putting away different amounts each month.

Not only that but possibly dipping into and spending some of the money which is a big mistake.

The first thing that needed to be done was to sit down and work out our incomings. This was wages and any other income we generated.

Once this was done then we did the same but with outgoings.

Usually, you will find the Incomings are not too bad and it is the outgoings that shock you.

So a budget planner is one of the first things to get sorted when doing any kind of saving. When saving money for a deposit on a home it is even more crucial you start with this.

Free Budget Planner:

This free Budget planner will help you with your goals.

This will help you get started and keep track of your incomings and outgoings which in turn will really boost the amount you can save each month.

I noticed I was spending £15 a month on private healthcare I hadn’t used and I had healthcare benefits elsewhere so it was a totally redundant expenditure.

It may not seem like a lot but this was £180 that year we could put in the kitty.

Once you have your Incoming’s and expenditure down on paper in front of you then you can start to work out how much each month you will have left to put into your savings.

That is once you get over the shock of what it all looks like written out in front of you.

Those morning takeaway coffee’s not looking like such a smart investment now eh!!.

If the amount you have left for savings is a nice amount then great you can save away and not make any changes to your routines or spending. Unfortunately, this doesn’t happen very often.

Most of the time people are spending way more than they thought they were and a lot of it is not necessary.

So the next step to saving money for a deposit is to cut spending.

CUT THE SPENDING:

Now you have worked out how much you are overspending, Yes YOU!!. You can also work out where to cut spending in order to increase your savings.

We found it was the little things such as meals out. We probably ate out twice a month.

Nothing extravagant but a nice meal out together or occasionally with friends or for a birthday.

It does all add up. We probably spent around £150 a month on average which is £1800 per year. WOW.

£1800 when you are saving for a deposit on a home could add up to 10% of the amount you need for your deposit. That’s crazy just for eating out.

As you can see the little things we take for granted such as a meal out with loved ones can all add up to a pretty penny.

Below is a small list of some of the things you can cut your spending on although I’m sure when you look at the list you created you can see for yourself where you need to cut back.

TV & BROADBAND:

TV and broadband is a great way to save. Simply swapping from one supplier to another when they are offering good deals can save you around £50 a month. Another £600 a year.

As well as swapping suppliers you can also cut your package down.

Fellas I know you think you need that sports channel subscription but just drop it for one year.

The sports channels in the UK can add another £40 a month to your bill.

Dont forget when looking to swap to go through cashback sites. This can get you some extra cash just for swapping.

MOBILE PHONE:

Another not altogether a necessary expense. Most of us spend between £40-60 a month having the luxury of large amounts of data and unlimited texts and minutes. If you are near the end of your contract try searching around for a better deal.

Mobile phone companies hold you to ransom. They make an effort to show off the latest shiny model but in all honesty, there is nothing wrong with having a phone that is a couple of generations older.

It may just save you £20 a month. You just need to get over the fact that it is not the latest model. Still does the same stuff though right?

FOOD SHOPPING:

This is a simple one. Like most people, we had a favourite supermarket where we went once every couple of weeks and did a shop. When we started saving however I looked around and started comparing prices for a lot of the main foods we brought on a regular basis.

So we started shopping at cheaper stores such as Aldi and Lidl for produce. I’m going to add it happens to be pretty good quality and also things like bread and dairy products.

We brought our meat from a wholesale butcher and all of this managed to save us around £75-100 a month.

I started batch cooking as well, this not only saved us time during the week but also saved us money.

MOVE OUT:

Sounds very drastic, doesn’t it? My wife and I didn’t have this option as we had a mortgage plus nowhere to go.

However, if you are currently renting while saving for something large such as a deposit for a house then it might be worth seeing if you can move in with parents or relatives for a few months.

Paying out for rent or a mortgage while trying to save a large amount of money is very hard. We managed to do it but it was a hard year I can tell you that.

GET A LODGER/STUDENT:

If you have a spare room then it is always an idea to get a lodger or student. This can help bring in some extra money for your savings pot. A spare room can bring in a few hundred pounds per month.

We had students for around 5 years and while it wasn’t always plain sailing it did make us around £3500 a year in extra cash. This was for only 6 months out of 12 so it really wasn’t too bad.

BANK ACCOUNT:

So once you have worked hard getting your savings started you are going to need to make sure they work for you.

If you intend on saving for a period of a year or more then you need to make sure that your hard-earned money is going into a high-interest savings account.

Make sure you pick a regular savings account. This will allow you to gain access to your savings whenever you need them.

No point in saving for a deposit and then not being able to access it when needed.

Some of the best current accounts around at the moment are offering over 4.5% interest and on a lump sum of several thousand you can see how it makes sense to keep your hard-earned cash in these accounts.

Second Job:

Sounds easy. Listen not everyone is going to want to or be able to get a part-time job if they are working a full week or have childcare needs etc. But if possible working a few hours overtime or getting a part-time job on the side can make a big difference to how quickly you save this deposit.

What Is A Normal Deposit For A House?

So when we were saving a deposit for our house we needed 20k or so. But that was in 2013. So what is a normal deposit for a house in 2024? Well, the answer varies of course depending on where you live.

The average across the whole country for 2023 according to Statista is £53414, which is far higher than when we were saving many years ago.

To obtain a mortgage, first-time homebuyers in the United Kingdom (UK) need to save a deposit amounting to about 19% of the property purchase price.

If you live in the south-east as I do then it is £59075. If you live in London the average normal deposit for a house is £108,048. Wales however is £36350 which is much cheaper.

WORK HARD:

The long and short of this article is simple. If there is something you really want, In our case a new home then you need to dedicate yourselves to it.

Do you need that takeaway meal? You don’t need that sports channel subscription. You can live without these things for a few months or a year to save that deposit for a house.

Won’t it all be worth it when you move into your new home? I mean you won’t have any money left to needlessly spend but you will have achieved something great out of your own hard work.

If you are looking for further inspiration check out the forums on Moneysavingexpert. They have lots of guides for saving and also buying your first home.

Let me know how saving money for a deposit on a house is going. If I can help with any tips or advice then I will. Leave your questions in the comments section or drop me an email if you would rather.