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Saving for a deposit on a property – 10 top tips to get onto the property ladder sooner.

The biggest barriers to getting onto the property ladder in 2015 are raising the huge deposit that is needed to buy a property and passing the Mortgage Review questions.

 

If you are looking to buy a property in the South of England a first time buyer property will cost in the region of £200,000 and in the North £110,000.  With most lenders still requiring a deposit of at least 10% of the purchase price, this means that first time buyers will need to find a deposit of £20,000 in the South and £11,000 in the North. The cost of legal fees, moving fees, mortgage arrangement fees and in the South Stamp Duty can easily add £5,000 in the South and £3,000 in the North.  That’s an awful lot of money to save up and it is going to take determination and an acceptance that you will have to cut back to get onto the property.

 

My top tips below will help you to get onto the ladder more quickly and will also help you in your Mortgage review. Remember your future lender is looking to lend money to someone who doesn’t fritter their money away and affordability of the mortgage is scrutinised by the lender carefully.  They will go through your bank statements like a forensic scientist so clean them up now before you are ready to apply.

 

  1. Firstly, assess what your disposable income is. This is the money you have left after you have paid for essentials such as rent, utilities, food, and travel expenses. Write down on a sheet of paper your take home pay after tax and NI in one column and then list in another column your essential expenses. If you often wonder where your money goes to having a couple of bank statements to hand while you do this is useful.

 

  1. Now, weed out everything that is non-essential such as:

 

  • Gym membership – you can keep fit by walking and exercising or training at home. Give notice and cancel any memberships.
  • Beauty treatments. Manicures, pedicures, facials, tanning whilst lovely are all luxuries that you can’t afford if you want to buy a house. Invest in some home DIY products.
  • Media subscriptions. These can be costly – if you have a media subscription for films, TV etc then cancel or go onto a basic package.
  • Eating out. Whether a week end treat or your daily lunch buying food from a restaurant or café is expensive. Take a packed lunch to work, and invite friends to dinner instead of eating out.
  • Drinks at the pub. Try not to get into a ‘round’ buying your own is cheaper and you can keep tabs on what you are spending. Set a limit and stick to it.
  • New clothes. Set yourself a monthly budget for new clothes/shoes/accessories/make up. Go through your wardrobe and see what can be updated or re-invented with different accessories rather than buying new.

 

  1. Essential expenses can also be reduced. Go through everything you spend money on and see whether you can get a better deal i.e.

 

  • Mobile phone contract and insurance
  • Utilities such as electricity, gas, oil, telephone, media and broadband packages
  • Life insurance, car insurance, health insurance

 

  1. Down sizing. Are you renting privately? If so could you move in with parents, family or friends to cut your monthly overheads?  If not could you move to a smaller property that costs lest in rent and running costs in the short term until you are able to buy.

 

  1. Car. Do you own a car? Do you need it? Could you sell it to raise funds or perhaps down size to a less expensive car? If you drive to work could you car share?

 

  1. Belongings. There are a number of web sites that will buy your old clothes, mobiles, DVD’s, books etc. Go through all your belongings and list and photograph anything you don’t want and sell them online or at a boot sale. Put the proceeds towards your savings.

 

  1. Birthdays and Christmas. Sounds mercenary but ask friends and family to set a limit of what you spend on each other. These celebrations can cost hundreds of hard earned pounds.  By setting a limit you can still enjoy yourself while keeping costs under control.

 

  1. Holidays – if you are serious about buying your own home as soon as possible then you probably can’t afford to pay for a holiday. Look into holidays where you can work and get paid such as fruit picking in Europe or some of the Holiday Camps in the USA where you get paid for helping out. Alternatively, stay at home and offer to decorate, garden, wait on tables for extra money.

 

  1. Where to put your savings. Look for the highest interest accounts to put your savings into. Remember the Govt ISA coming out in August 2015 will help to boost your savings.  They will give you a £50 bonus for every £200 you save up to a maximum of £3,000.  Most high street lenders are offering the scheme.

 

  1. Shop around for your legal costs, mortgage costs, removals etc. Contact CMS who will help you to save money on all of these things.

 

Sharon Buthlay

Director

Conveyancing Marketing Services Ltd

01638 576478

07810 595 354

Sharon@cms-uk.co.uk

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