Saving can be tough. With so many bills and responsibilities, it can sometimes feel like an uphill struggle to save up for a new house. That’s why we are offering 10 effective ways you can save up for a deposit to finance your first home.
1 – Help to Buy
Do you need a little help saving for a mortgage? Help to Buy might be just the thing you need to ensure you receive keys to a new home. The government scheme offers lenders in England an affordable way to buy a new or existing property, requiring just a 5-10% deposit.
2 – Check Out First Buy
If Help to Buy isn’t for you, maybe First Buy is. The government scheme allows mortgage buyers to purchase a new home for a loan of up to 20% of the price of their house – and you would only need 5% of the deposit to buy it. First to Buy is only available for new build properties, and the loan is repayable once you sell your home.
3 – Know What You Must Pay
So, you know how much your mortgage will cost, but have you factored other fees in? It’s not just the deposit and mortgage that will cost you, homeowners will be required to pay a mortgage arrangement fee, which is typically £1,000 – and is non-refundable if the mortgage falls through.
Have you factored in the price of the valuation fee? You should budget up to £300 for this service, which is the charge for a full valuation to ensure your property exists and that is offers security for the loan.
Some lenders will contribute towards the legal fees. However, if you pay for your own conveyancing, you should budget between £500-£800, but this will depend on the purchase price.
Buying a property that exceeds £125,000? You will have to pay stamp duty land tax on the purchase price. Find out how much you will have to pay with the stamp duty calculator.
A typical survey costs between £400 – £700. A building survey is essential to identify if there are any problems with the home before you finalise a mortgage agreement.
4 – Make a Private Deal
Why not see if it’s possible if you can make a private deal with the current homeowner? Write the homeowner a letter asking if they would be interested in selling the property to you directly. You might find they are happy to so they can save money on estate agent fees.
5 – Grab Free Furniture
Are you worried about furnishing your new home? Well, worry no more, as you can grab some free furniture from websites such as Freecycle. While there’s bound to be a little bit of tat on the website, there will most definitely be some hidden gems out there – and you won’t have to pay a penny for them. You can find everything from free sofas and beds to TV and fridges!
6 – Cut Costs Where Possible
Are there ways you can cut down on expenditure? It could be as small as switching from a well-known brand to a no-frills alternative. Little changes will make a big difference to your bank balance over time. Can you lower your TV broadband package? Can you downgrade your mobile phone? Maybe you can cut down the expensive meals out to a home-cooked version. There are so many ways you can minimise your outgoings. You just have to be smart and strict.
7 – Check if You Have PPI Available
Have you ever paid for insurance on a credit card of loan? Did you feel pressured to take out payment protection insurance (PPI) for the sake of the loan? You could be entitled to a refund. So many people across the country are due PPI compensation – and you only have until Spring 2018 to claim it. Companies like HaveIGotPPI.com can help you make a claim, and that extra bit of money in your bank balance could go towards the cost of your new home.
8 – Find Out the Right Council Tax Band
Did you know that 400,000 homes in England and Scotland have been placed in the wrong council tax band since the early 1990s? Your new or current home could be in the wrong council tax band, which is why it’s essential to check the council tax to see if yours can be lowered.
9 – Bag the Best Home Insurance Quotes
Another expenditure you might not have considered is home insurance – which must be in place before you buy your property. This insurance protects you in the event of damage to your property. Ensure you have exchanged home insurance contracts before you purchase your home so you have suitable cover.
Whilst it might feel easier to accept your mortgage provider’s home insurance cover, we recommend browsing the market to find a cheaper alternative elsewhere.
10 – Open a Good Savings Account
Your savings account isn’t just a place to store your cash. A savings account with an excellent interest rate could help you reach your dream of owning your own home a lot quicker. If you plan to set aside a lump sum every month, it’s probably best to opt for a regular savings account. However, if you want a savings account that offers greater flexibility, it might be best to invest in an instant access savings account.