With the housing market as challenging as it is right now, a lot of people are struggling to save enough money for a deposit on a first home and we’re seeing a lot of people renting for much longer than they might have in the past. Some recent research from Barclays on whether people see themselves renting short term, long term or forever showed the respondents thought to be in the youngest age bracket are the most pessimistic about their chances of buying a property in the foreseeable future. It seems that young people are gearing up for a long time in the rental sector before they can afford to jump on the first rung of the property ladder.
So how you can you go about saving up for a mortgage deposit in tough economic times? Here are a few tips to get you started:
Set yourself a target
It helps to know what you’re aiming to save and over what period of time. Of course, housing prices and mortgage rates change, but if you can settle on a ball park figure you’ll know what you’re working towards and you can regularly check your savings to see whether you’re on target to have your deposit ready at the time you’re hoping to find a home.
Find the right savings account
You need to shop around for the savings account or ISA that will give you the best interest rate, and ideally that doesn’t tie you in if the interest rate falls in the future. Sometimes it’s necessary to save money in more than one account to make your money work as hard as it can. It’s also really important to be aware of when your savings account stops being the most economic and be sure to move your money around so you are always getting the best deal.
Revise your budget
Saving enough for a mortgage deposit in an economy like ours right now is a real challenge and you’ve got to figure out where your priorities are. Have a rigorous look through your monthly outgoings and make a decision about what spending you can reduce in order to save a decent amount each month. You might have to sacrifice some luxuries like subscriptions to TV or movie services, or start going for runs in the park instead of the gym – but it will pay off big time when you sign on the dotted line for your dream house. Consider making a budget sheet to help keep your spending in check.
Commit to an amount you’ll save each month
The best way to ensure that you put something aside towards your deposit every month is to set up a direct debit. This way the money you are saving is non-negotiable; you’ll treat it like any of your other bills and won’t be tempted to skip a month here and there. Choose an amount you know you can manage every month, and you can always transfer extra savings into the account if you ever have surplus you’d like to put towards the deposit.