Saving for a Deposit: Budgeting Tips for Homeowners in the UK

Pro Tips to Build Deposit for Your Dream Home

From determining your deposit goals and effective financial planning to seeking state-sponsored help, several techniques can be utilised to save for a deposit. Let’s discover some effective ways and means to build a deposit for buying a home in the UK.

1. Set a Realistic Deposit Goal

Start your savings by determining how much you require to build a substantial deposit. Choose a feasible deposit amount with the help of the analysis of your property requirements, property value, and the conditions set by the lender. Traditionally, entering the real estate market requires having at least 5 to 20% of the home’s value to make the first payment. You can try to make an even bigger deposit so that the monthly amounts you pay for your mortgage can be relatively lesser. Stamp duty, valuation fees, mortgage arrangement fees, legal fees, etc., should also be considered when saving for a deposit.

2. Cut Down Your Spending

Budgeting is vital for any kind of saving and reducing your daily spending can contribute to building a deposit for purchasing a dream home. Review all your spending and try to cut down on expenses like utility bills, travelling, subscriptions, memberships, and others. You can also try to avoid unnecessary expenses such as consuming takeaway foods or restaurant meals, travelling in a personal car, using branded products for daily use, etc.

3. Start a Side Hassle

To save more money, you need to earn more and a side hassle can be a vital option to do so. Increasing your output is a good method to save extra money and build a decent deposit to purchase a dream property in the UK. You can turn your passion into a side business. For instance, if you are good at dancing, start part-time dancing classes to earn extra income. Several other options can be availed of for earning an extra income like working as an online sales agent, promoting brands, freelancing, etc.

4. Choose a High-yield Saving Account

Another good technique for the accumulation of funds to acquire a residential property is to save your money in a high-yield savings account. Differentiate many savings accounts and select the account which pays high rates of interest. You may open an ISA (Individual Savings Account) to earn more interest on the amount you keep there and to have tax-efficient gains on the capital. The ISA account provides an opportunity to invest up to £20000 every year in building a deposit.

5. Explore Government’s Help-to-Buy Schemes

The UK government offers several assistance schemes to first-time homebuyers to save on initial deposits and realise the dream of homeownership. These assistance programs provide help to pay your deposits, get low-interest loans, avail discounts on property purchases, etc. Schemes like mortgage guarantee schemes, shared ownership, first home schemes, and others are available for eligible applicants.