Getting onto the property ladder is one of the top life goals for many people. But, especially in today’s financial climate, it can also seem almost unachievable.
However, when thinking about how to save for a new home, making small adjustments and smart choices can all add up to something more substantial and get you closer to your ultimate goal.
From taking advantage of schemes for first-time buyers to savvy saving, here are our tips on how to save for a new home deposit while still renting another property.
Have a plan
Like anything in life, planning is key. Having a realistic time frame will help keep you motivated and on track.
If you haven’t already done so, it’s time to get to grips with your finances. There are plenty of free apps you can use for this or you can simply input your incomings and outgoings into a spreadsheet.
From here, you can identify areas of your spending where you can easily cut back — for example, picking one TV streaming service instead of two or three, cutting down on takeaways or nights out — work out how much you can realistically save per month, giving you a workable timeframe of how long it will take you to reach your goal.
Take advantage of help-to-buy schemes
There are various schemes to help first-time buyers get on the property ladder, including some schemes only available on new-build homes. An independent financial advisor can provide details of all the options open to you and Peter Ward Homes have a panel of advisors who provide advice free of charge.
Here at Peter Ward Homes, we participate in the Deposit Unlock Scheme, which enables you to buy a new home with just a 5% deposit. Another option we offer for first-time buyers is the Own New — Rate Reducer. This offers lower mortgage rates and only requires a 5% deposit, but unlike shared ownership, allows you to own 100% of your new build first home.
Reduce your rent
If you’re currently renting, it could be worth looking around for a more economical option. For example, a house share is cheaper than renting an entire place to yourself. Also, think about location. If you’re currently commuting to work from your rental, could you move nearer and save on the travel costs?
Another option could be to move in with family or friends while you save. They would benefit from rent and help with bills and the money you save could get you into your first home faster.
You’ll have to weigh these options up against any extra costs you might incur, such as putting your furniture in storage, but it could prove to be the extra boost that you need.
Cut out non-essentials
As part of a bigger picture of saving, cutting out the non-essentials can make a real difference.
For example, if you normally buy a coffee on the way to work, and lunch every day, you’re probably spending around £50 a week. That’s around £2,500 a year. Making your own coffees and lunches could save you over half of that. You could also commit to buying pre-loved clothes for a year or two, instead of new purchases. When thinking about how to save for a new home, these short-term sacrifices should move you closer to your goal faster.
Boost your savings
Savers can currently take advantage of higher interest rates, so take some time to research the top-paying accounts to maximise your investments. When looking at accounts, check the minimum amount of time it must be open before withdrawing — some accounts charge penalties for early withdrawals — and ensure that fits within your timeframe.
Basic rate taxpayers can earn up to £1000 interest per year tax-free. After that, you’ll need to look at ISAs which allow you to put in up to £20,000 per year, the interest on which you will never pay tax.
If you’re aged between 18 and 39, a Lifetime ISA allows you to save up to £4,000 per year towards a first home costing £450,000 or less, with the government adding a 25% bonus each month. You then receive interest on top of this. If you’re buying as a couple, you can open a Lifetime ISA each. You must have held it for at least a year before withdrawing and it must go towards purchasing your first home, otherwise, you’ll pay a penalty.
Take on a side hustle
From selling clothes on Vinted to pet sitting or filling in online surveys, there are lots of ways in which you can earn a little extra cash to add to your deposit fund.
Think of any particular skills you have that you can spin into extra earning potential. Can you offer guitar lessons to the local community for example? Teach English to foreign students online? Perhaps you’re great at crocheting and you can sell your wares on one of the online marketplaces such as Etsy. When thinking about how to save for a new home deposit, anything extra you can bring in will make a difference!
Here at Peter Ward Homes, we love to help first-time buyers achieve their dream of home ownership and we hope these tips show you that it could be closer than you think.
Head back to our news section for more help and advice on your homeowner journey.