Saving up to take the first step onto the property ladder is exciting, but given how much you have to save it can also be challenging. To help, here are some tips to build your savings quickly and also ways you may be able to get assistance.
1. Reduce the amount of rent you pay
Downsizing your property can be a great way to cut the cost of rent – which means you can add the money you would have spent into your savings account. You may also be able to reduce the cost of your energy bills if you’re able to move into a smaller property.
2. Look at your spending
Analysing your spending habits can help you see where to cut back. You’ll also be able to see if you’re over-paying for anything or if there’s any unnecessary spending you can stop. Creating a budget can help you set yourself spending limits and determine how much you have spare to save each month.
Explore more: Understanding your spending
3. Open a separate savings account
Opening a savings account specifically for your home deposit can help you keep it separate from your everyday spending account and even other savings accounts.
You may want to consider opening an Individual Savings Account (ISA), which is a tax-efficient way to save. There's a limit to how much you save tax-free in an ISA, but it may be worth considering.
Explore more: ISAs vs savings accounts
4. Do some freelance work
If you have a skill to share, why not see if you can increase your income by doing a bit of freelance work? You may need to check this is okay with your current employer and look into paying tax, but it can be a useful way to earn some extra cash.
5. See where you can get help
A guarantor mortgage is where someone agrees to cover the mortgage repayments in the event you’re unable to meet your repayments. They may also need to put up their own home or their savings as security.1 It can be a useful way to get onto the property ladder, but it’s important to understand all the risks associated with it. There may also be some restrictions on who can be a guarantor.
You can also look at purchasing a property with another person. This could be a partner, a friend or anyone else you trust. You’ll need to look into all aspects of this option to make sure it's right for you and the person you’re buying with. A mortgage is a long term arrangement and you’re likely to be linked with whoever you buy the home with financially for a long time.
Please note that HSBC doesn’t offer guarantor mortgages. However, they may still be worth looking into if you’re looking at ways to purchase your first property.
Checking how much you can borrow for a mortgage can give you an indication of the type of property you could afford. It may also help you work out how much you would need to save for a home deposit.
When saving a deposit for a home, make sure you take into account any extra costs for things like solicitor fees and moving costs. And remember that your home may be repossessed if you do not keep up repayments on your mortgage. So it’s important you budget for these repayments once you’ve purchased the property.
This article provides general information and does not take into account the financial situation of the reader. For this reason, it must not be relied on as financial advice. All accounts are subject to terms and conditions.