Top tips on how to save a deposit

February 2016



The Help to Buy scheme gives you a great opportunity to get on to the property ladder but even with just a 5% deposit being needed, you’ll still need to save up a substantial amount of money.

We’ve created this guide to give you our top tips on how to save up a deposit.

Tip #1

Be clear about how much needs to be saved

As a buyer there are a lot of different options available to you in terms of funding for your deposit.

Before going to view properties and definitely before you reserve one, you must look at how much deposit the property will require. With Help to Buy all you need is a 5% deposit, so for example, a property worth £150,000 will require a deposit of £7,500.

Tip #2

Be flexible with your choices

 House prices can vary in price depending on the area or development that you want to move to. If you don’t have many commitments to one specific area, you should check out all of your options within a larger search area, as you may be able to buy the house type you want on another development for less money, which in turn will lower the amount of deposit you will need.

Tip #3

Start saving!

The best way to start saving is to make a weekly or monthly commitment to putting a certain amount aside. If you assess your finances and figure out what you are willing to give up (for instance, cutting back on buying new clothes etc.) then you can just set up a direct debit to go in to your savings account on payday so you aren’t tempted to dip in to the money during the month.

Tip #4

Set up an account

If you are saving up with a partner, a joint account could be a good option for saving money. You can both keep track of how much money is being put in to the account and get a good idea of how long it will take you to reach your goal amount.

If you aren’t buying with a partner or you don’t want to open a joint account you can create separate savings accounts and agree to an amount that you put in each month.

Tip #5

Set up a Help to Buy ISA

If you are saving for your first homes, you can save your money into a Help to Buy ISA and the government will boost your savings by 25%. So for every £200 you save, you will receive a government bonus of £50. The maximum government bonus you can receive is £3,000 (a total of £12,000 saved by you).

A range of banks and building societies offer the Help to Buy ISA and the account is available to each first time buyer, not each household. This means that if you’re planning to buy with your partner, for example, you could receive a government bonus of up to £6,000.

To kick-start your account, in your first month you can deposit a lump sum of up to £1,200. The minimum bonus you can receive is £400, meaning that you have saved at least £1,600 into your Help to Buy ISA before you can claim your bonus.

For more information about the Help to Buy ISA, click here.

Tip #6

Track how long it will take 

An end goal makes it easier to save rather than feeling like you’re not making much progress yet still putting savings away each month.

Try to set up mini goals along the way to your overall target. For instance, if you want to save up £7,500, and you have already saved up £600, you could have a mini goal of ensuring you have £3,750 by the end of 12 months so that you’re half way there. If you think putting a set amount away each month isn’t achievable, having mini goals can help you. As long as you have saved up £3,750 by the end of the year, it allows you to change the amount you save each month.

If you want to work out how long it will take for you to save up a deposit, fill in this savings calculator.

Tip #7

Stay dedicated

It is important not to lose heart. The best time to save up for a deposit is before you even start looking for a home, that way you’re not really confined to a strict deadline.

If you start to forget why you’re saving, remember that even if it takes a couple of years to save up, you’ll have a lovely brand new home at the end of it.

 

If you would like any more information regarding Help to Buy, click here.