How to save up for a mortgage depositfeatured
Saving up for a mortgage deposit is not easy, and for many, it can take a number of years.
I’ve set myself the challenge of saving up a very small £10,000 deposit in the space of a year. Change of plan, make that £12,000 (It’s depressing that such a large amount of money is considered a small deposit!) But I’ve had to move back in with my parents in order to do so. If I was renting, it simply wouldn’t be possible.
Here I’ll share with you just a few money-saving tips, some of which have helped me to save up what I’ve tucked away into an ISA so far:
Set up a direct debit
Every pay day move a certain amount of money from your current account into a savings account. By setting up a direct debit you can make sure that you don’t forget and you can also ensure that saving is a priority. If you’re serious about saving up a decent deposit in as little time as possible, move over as much as you can. I’m transferring more than half of my monthly wages into a savings account. If you’re spending a lot of money on rent and bills each month you may have to settle for putting a quarter or a third of your wages in instead. Still a great effort!
Something’s gotta give
If you want to go all in for a deposit, you’re probably gonna have to give up nights out for a while. If you go out every Friday and spend £20, that’s more than £1000 in the space of a year. And I doubt many of us can do a night out for as little as £20 anyway. That’s cheap!
I rarely go on nights out these days and have had to pretty much give up meals out too. Basically I’ve become super boring.
Cut back a little each day
It’s surprising just how much a cup of coffee here and a Lion bar there can soon add up. Spend a week paying for everything by card rather than cash and assess your online bill afterwards. I bet you’ll be surprised just how much you spend each day on unnecessary treats or lunches that you could make yourself for cheaper. Say you spend £5 a day on lunch plus £2.50 on a coffee and treats, that £7.50 a day could add up to £1,800 a year. That’s almost £10,000 over five years. That’s a small deposit right there!
Free days out
Having fun doesn’t have to cost money. Go for a bike ride in the woods with your other half or take your friend to an art gallery. Nights in can be way more fun than nights out if everyone brings a bottle and lots of cheap grub.
Downshift challenge
When you next nip in Sainsburys, instead of buying Heinz beans, give Sainsburys basics a go instead. I personally don’t think they taste that much different, but I know some may disagree. If you do this with every item that you buy as part of your weekly shop, it’s amazing how much you can save.
Sell your old stuff
Set some time aside to rummage through your old belongings that you barely use anymore and sell as much stuff as possible. Car boot sales are my personal favourite, and they’re a great way of getting rid of loads of stuff all in one go. There’s obviously also Ebay and Amazon too. Getting rid of your old junk will also make it much easier when you come to move into your new place.
Transport costs
If I was to get the tram to work each day, it’d cost me £30 more each month than it costs me on the bus. Is there a cheaper way for you to get around? Maybe you could cycle to work or take it in turns to drive with a friend. If you’re getting public transport, assess ticket prices to work out whether it’d be cheaper for you to buy a ticket to an earlier destination and walk the rest of the way. If you work in the city centre it’s common for stops just outside the city to be a significant amount cheaper than the ones inside.
Give up the gym membership
Unless you’re a regular at your gym and go 3 or more times a week, it’s probably worth quitting your membership if you can. I’ve saved £60 alone in gym membership fees since I started saving, but thankfully I was a member of Pure gym which allows you to cancel at any time. If you can’t cancel, see if you can transfer your membership to a friend. Once you’ve quit, walk, run and cycle to keep in shape.
Trade in old games
If you’re into playing PS4 or XBox, then you can often trade in your old games for cash. You’re likely to get better value if you swap your old game for a new game though, rather than cash. So if you’re a regular gamer, this could save you tons of money in the long run. You’ll be able to play as many games as you like, but you won’t have such a large collection.
Give up expensive habits
Smoking and drinking is pricey. I know that it’s easier said than done, but if you do manage to give up, your purse will thank you.
Don’t even step foot in the shops
Having to walk past high street shops every day can make you spend more money. If you can, change your route so that you aren’t tempted on your walk home from work. I’ve saved so much money since I stopped going shopping. If I do have to walk down Market Street and I see a sale sign in Miss Selfridge’s window, I now just ignore it. Before this money-saving mission I probably would have ran in before emerging with at least £50 worth of clothes.
Saving up for a mortgage deposit isn’t easy, and there can be times when you look in your savings account and just think “I could treat myself to something with this money right now”, but it’s important not to give up. When you finally get the keys to your first home and start unpacking and making it your own, it will all be worth it.
Got any more money saving tips to help readers save up for a mortgage? Let me know in the comments below!
