How to save to buy a property

Saving up for a deposit to buy a property can seem daunting, especially with the current high cost of living. However, there are numerous ways that can help you in achieving your goal of buying a home.

Consistent saving ensures your deposit is ready when you’re ready to buy, while also demonstrating to lenders your ability to manage mortgage repayments. Whether through smart budgeting, reducing expenses, utilising government programs, or seeking advice from a mortgage adviser, there are multiple approaches to enhance your prospects of saving enough to buy a property.

Budget wisely

Regularly reviewing and adjusting your budget will help you maintain progress toward your savings goals. It’s important to anticipate unexpected expenses and be sensible in your estimates – it’s better to over-estimate than under-estimate.

By carefully analysing your income and expenses, you can identify areas where spending can be reduced to save for a deposit. For example, consider cancelling unused gym memberships or streaming subscriptions.

Setting up a direct debit to automatically transfer funds to your savings account each month can streamline your savings efforts. This method ensures consistency and reduces the temptation to spend money that should be saved.

Make cut backs where you can

When saving for a property, cutting back doesn’t have to mean giving up everything you enjoy. By conscientiously managing your expenses, you can accelerate your savings and bring your dream of homeownership closer to reality.

A practical approach is to review and optimise your regular expenditures, such as utilities and insurance. Ensuring you’re not overpaying for these essential services can free up additional funds for savings.

Furthermore, it’s important to assess discretionary spending on activities like dining out and shopping. While these expenses may seem minor individually, reducing them can result in significant long-term savings. For instance, setting a goal to dine out only twice a month is a straightforward adjustment that can contribute significantly to achieving your savings target.

Use government schemes

There are several government schemes available to help boost your deposit, including:

Lifetime ISA

The Lifetime ISA functions like a savings account but comes with additional benefits. You can deposit up to £4,000 annually and receive a 25% government bonus (up to £1,000 maximum). This bonus significantly accelerates your savings towards your deposit goal.

Shared Ownership

Shared Ownership allows buyers to purchase a share (typically between 25-75%) of a property and pay rent on the remainder owned by a housing association or developer. This scheme enables individuals to enter the property market with a lower initial deposit and gradually increase their ownership over time.

First Homes

First Homes is a UK government initiative designed to assist first-time buyers in purchasing a property. It provides a discount of up to 30% on the market value of a new-build home, making homeownership more attainable for eligible applicants.

Bank of Mum and Dad

In addition to considering these other ways to increase your savings, another reliable option, if available to you, is financing your home purchase through assistance from your family or loved ones—commonly referred to as the ‘Bank of Mum and Dad.’

If you’re planning to utilise support from the Bank of Mum and Dad to enter the property market, it’s important to note that lenders typically require these funds to be a gift rather than a loan that must be repaid. Some lenders may even request the individual providing the funds to sign a gifted deposit letter and provide documentation tracing the source of the deposit.

Speak to a mortgage adviser

Whether you’re just beginning to save or you’re preparing to purchase your first home, getting mortgage advice from a professional is invaluable.

Our advisers have access to over 12,000 mortgage products from more than 90 lenders, allowing them to find the right one for your needs. They assess your income and expenses to determine your borrowing capacity and savings goals. Afterward, they’ll guide you through all available options to help you buy your first home.

If you have any questions, please don’t hesitate to reach out to us today or request an appointment. We’re here to provide comprehensive support and manage your entire application process from start to finish.