Tips for First Time Buyers – How to save for a deposit in a year
Updated: Aug 28, 2018
Could you save for a deposit on house in just 12 months? Kate Saines from ‘What Mortgage’ on line spoke to one couple who, without the Bank of Mum and Dad and whilst also paying rent, managed to do just that. Here are their saving tips.
We frequently hear stories of how young people cannot afford to get onto the housing ladder. When they do it’s often with a financial boost from their parents or because they have moved back to the family home to save on rental costs.
But one first-time buyer has revealed how she and her husband saved enough money for a deposit on a home without any of this help.
In fact Jessica McDonnell, 27, and her husband James, 29, (pictured) took on extra work, reigned in their spending and ditched holidays and eating out in a bid to put down enough money to obtain a mortgage.
The couple said they realise it’s a struggle for many first-time buyers to get onto the housing ladder, and acknowledge they were very fortunate, but they hope their story will illustrate it could be possible to save money for deposit – even in a short space of time.
Jessica and James decided to take the plunge and become homeowners when the landlord of their rental house announced he would be selling in twelve months’ time and wondered if they would like to buy it.
“Buying a home had not really entered our mind prior to this, we had been happy renting,” Jessica said. “But the more we thought about it, the more we realised how much we really liked the property, the local area and that despite being on the smaller side, it had a lot of potential for future renovations.”
Setting a goal
The couple had just 12 months to save for a deposit on the home. Terrifying as this may sound, Jessica said having the deadline was helpful and advises others saving for a home to set one as a greater incentive.
Planning and budgeting
As the couple were still paying rent, they had to look at other ways to reduce their spending in order to find money to save. One method they used was to cut down their grocery bill. They did this by switching their weekly shop in Morrisons to budget store, Aldi.
They also planned each meal in advance to ensure they only bought items they needed and weren’t wasting any food.
Jessica added: “We would also pop by the supermarkets after work and have a look in the reduced food section. We also used cashback apps to get discounts on our food shopping and occasionally some promotional freebies.”
To supplement the couple’s main income, Jessica took on extra freelance work and both she and James also began mystery shopping, doing surveys and taking part in market research. This helped them add an extra £100 a month towards their saving goal. “It is quite easy to make money online with plenty of research,” said Jessica, “and many of the tasks took less than an hour to do, apart from my freelance writing.”
Help to Buy ISA
As first-time buyers Jessica and James were able to use a Help to Buy ISA as the savings vehicle for their deposit. They each topped this up with the maximum of £200 each per month and, at the end, they benefited from the Government bonus which helped the fund reach its target.
Jessica added: “We found the mortgage process very difficult because we felt that there wasn’t enough information out there on the stages for first-time buyers with a Help to Buy ISA. However, we were lucky that despite not knowing what to do, everything ran smoothly for us, despite delays with our solicitor.”
Highs and lows
There were many high and low points over the course of the 12 months the couple were saving for their deposit. Living in the home they were going to buy provided a constant reminder of what they could lose if they didn’t squirrel together enough for the all-important deposit.
Their house was in an affordable area compared to other homes. And so their biggest fear was not saving enough, losing the house and being forced to rent elsewhere. This would have meant they would be trapped paying higher rent and unable to afford a deposit to buy. But the couple’s hard work and cutbacks paid off, and they are now the proud owners of their very own home.
“It feels great to know that we are finally homeowners,” said Jessica, “and we have managed to save up so much money without help from our parents.
“We feel fortunate and appreciate that not everyone will be in the same position as us, but I feel like our story shows that it can be possible to save a large amount of money in a small space of time if you really put your mind to it.”
Jessica’s dos and don’ts for first-time buyers
Do set yourself a deadline when saving and stick to it as much as possible.
Don’t be too hard on yourself if you have a difficult month or struggle some weeks.
Do look for money-saving methods such as switching to cheaper brands/stores, using voucher codes, cashback and discounts.
Don’t be afraid to ask questions.
Jessica said: “We were constantly asking friends and family, the bank and solicitors questions and during the entire process. They gave us great advice and our mortgage application wouldn’t have run smoothly without their help.”
Article Posted on June 19, 2018 by Kate Saines in What Mortgage.co.uk