Saving up to take the first step onto the property ladder is exciting, but given how much you have to save for a deposit it can also be challenging.
Here are some tips to build your savings quickly, as well as ways you may be able to get assistance.
1. Reduce the amount of rent you pay
It won't always be possible, but downsizing your property is a quick way to cut the cost of rent and increase the amount of money you can save. Then you can put the money you would have spent on rent aside for your deposit. 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.
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.
The best type of savings account for you will depend on:
- how much you need to save
- how often you plan on adding money to your savings
- when you need to have the money saved by
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
There are some different options that can reduce the amount you need to provide as a deposit.
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.
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.
You can also purchase 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 financially linked with whoever you buy the home with for a long time.
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 payments on your mortgage. So it’s important you budget for these payments 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.