Of course, the overall time you need to save for a house deposit depends on the home’s price. The average deposit size for buying a home is £32,321.
Setting yourself a deadline of just one year to save for a house deposit is quite a big goal. The average amount of time that a couple typically takes to amass deposit funds is around 3.5 years. If you are saving on your own, add another ten years to the average time.
However, if you get the funds together in only twelve months, it is possible. Here is a seven-step guide to amassing the money you’ll need.
1. Cut Back On Your Social Life
A recent study conducted by a leading public house operator showed that the average cost of a night out for 26-30-year-olds is £66. It also revealed that this amount was being spent roughly once per week. Nobody doubts the fun that this is, but at £300 per month (£6000 a year for a couple), it is an expensive form of pleasure.
Cutting back on this type of spending doesn’t mean you are a party-pooper. It suggests you might be in line with the trend in alcohol and cigarette spending. Since 2000, there has been a decrease in such spending of around 50%. The British Heart Foundation estimates that approximately 83% of the 16-24 age group regularly get the recommended minimum amount of physical activity.
2. Reassess Your Holiday Plans
According to research by Lloyds Bank, the average cost of holidaying as a couple is around £2,800 (half that for singles). That is a significant sum that could go into your home deposit pot.
ATOL estimated the average cost of a family holiday to be over £3,000. They also warn that holidays can turn into money pits if you are not careful. On average, families have an overspend of around 17% on holidays. That’s £510 extra on a £3k holiday!
Holidays are meant to be relaxing and stress-free. However, if you are overspending at this rate, you will likely lose any benefits of relaxation. Holiday budgeting confusion caused by currency exchange rates, impulse purchases, and unexpected events can seriously scupper your chances of achieving your home deposit goal.
3. Get Rid of Your Car
Unless it is essential for commuting to work or living in a remote location, you should view owning a car as a luxury. Selling your car or simply not having one can add several thousand pounds to your home deposit fund. Leading car rental company, Autoeurope, estimates that owning a car and driving it 10,000 miles per year costs around £168,000 over a lifetime.
4. Start Selling Your Stuff
Sites like Gumtree and eBay make it incredibly easy to sell unwanted or spare items. Depending on what you have to sell, you could make hundreds or thousands of additional cash for your home deposit.
5. Get a Help-to-Buy ISA
Help-to-Buy ISAs are only available to potential homeowners in London for properties valued between £250k to £450k. If you save a minimum of £1,600 into the ISA, the government will add 25% to your fund.
Saving into a Help-to-Buy ISA is limited to £1,200 in the first month, then £200 after that. When you are in a position to buy, your solicitor adds the government’s contribution and your lump sum gets a 25% boost. It’s effectively free money, so give it a go!
6. Move Into Cheaper Accommodation
You may love the rental flat you are in, but it is not yours. Think about moving into cheaper accommodation so that you can maximise saving for a place of your own. Depending on your location, you could save several hundreds of pounds a year on rent. This money can go towards your new home deposit.
7. Consider Using CreditLadder to Pay Your Rent
Having a large enough cash deposit will not be all you need to get your new home. You will also need a decent credit score to secure a mortgage. An excellent way to improve your credit score is to pay your rent through CreditLadder. They then pass on your payment history to the credit agencies such as Experian.
Saving for a home deposit in twelve months is challenging but not achievable. Hopefully, following these seven steps will get you going along the path to your home deposit goal.