8 things to think about when saving for a house deposit

Saving for a house deposit can seem daunting, however if it’s something that you want, it is achievable. We’ve put together 8 tips for the things to think about whilst saving.

1. Location

Where and what sort of property you want to buy will dictate how much you need. Allow for at least 15% of purchase price, plus legal fees, stamp duty, estate agents cost and other contingencies.

2. Timing

When do you want to buy? One year, three years or five years away? You can then set a goal which will help to determine your saving habits.

3. Save to the max

How much can you afford to save? Pay your bills first, give yourself a weekly allowance then save the rest. Take out your allowance in cash at the beginning of every week. Leave your cards at home if you have to. It will stop you from spending without thinking and allow you to save more. This will also show responsible budgeting to a mortgage lender.

4. Research

Look up other saving tips, for example every time you spend money on something you don’t need, put the same amount in your savings account. This means you will feel like you are spending “double” which will make you think twice about what you buy today.

5. Have a life!

Saving for a house deposit doesn’t mean you have to become a recluse. You just have to work out what you can afford. It is about balancing what you want now with what you want in the future.

6. Have a backup

Add at least £3,000 contingency. Even after budgeting for the deposit and legal fees etc. you will always need a little bit extra for those unexpected costs. Don’t underestimate your contingency budget!

7. Where to save?

Many people use ISAs to save for a deposit. If this is what you have planned, remember you have an annual limit of £15,240. There are different types of ISAs, make sure you’re comfortable with which one you choose.

8. Remember why you’re doing this

Your own home brings a sense of security, independence and pride but it isn’t easy. When you feel frustrated about cutting out luxuries or socialising less, remember the long term goal. If you really want it, it will be worth it.