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How To Save A Deposit Quickly
Every Little Helps
Everyone knows that one of the most difficult parts about buying a house is securing a deposit, particularly if you are a first time buyer. Now in an ideal world, you have your budget planned, and your deposit saved well before you start looking for your house. However, sometimes real life steps in and you have to get the funds quicker than intended, or even replace a sum that has been used elsewhere. This hub will help you make small changes to your day to day living in order to save as much as possible using funds available.
What are you saving for?
Set A Goal
Firstly, you should look at exactly how much money you have to raise, as well as how quickly you have to do this in. Bear in mind that you don't necessarily need the funds in place at the time of making an offer, particularly if the seller still needs time to find a new home, but it is important that you are confident that you can find the cash shortly after making an offer. This should usually be within a month or so, if the offer is accepted.
Before you think about buying a house, you should also check and repair your credit score, if necessary. This means you will have more power when choosing your mortgage provider- the better rates are usually for those with a better credit score.
It is usually easier to get a mortgage in principle from the bank first, as this will tell you exactly how much you need to save, as a percentage. My mortgage was a 5% mortgage, which wasn't tied into any government schemes. This is quite rare, but meant that I didn't have to save as much. Look at your options. Speak to a mortgage advisor if possible so that you are as well informed as possible.
Re-Think Your Habits
Think about how much you spend on an average daily basis. Whether it be on food, drinks, travel, smokes, your daily spend can add up quite quickly. On average, I'd say I could easily spend £10 per day just on refreshments at work, before I actually sat and thought about it.
It sounds silly, but I was amazed at the amount of cash I was spending each month on things like fizzy juice, sweets and even lunches. As a non smoker and rare drinker, I didn't have to do much to tidy up my habits, but in making some simple changes, I was able to save even more cash.
It can be difficult to give up some habits, I know, but try to think as things as an equivalent part of your goal. i.e- that £10 per day I'll spend at work adds up to 4% of my target over a month...
Again remember that this will not be forever. You are living pretty extremely, and it will take a bit to get used to, but it is not forever! Plus, every little helps!
You could make switches such as:
- Fizzy Juice swapped for diluting juice or squash- I don't like water, either!
- Sweets to home- baked cakes and biscuits. Much cheaper!
- Buying lunch to taking lunch.
- Socialising to nights in.
- Taking the car for public transport- only if feasible and cost effective.
- Public transport for a bike- too much?
Re-Evaluate Your Finances
Unless you are a particularly savvy shopper and regularly update your providers, it is likely that you have some cash to spare without even realising it. Simply by switching providers on a lot of standard bills, you could significantly reduce your outgoings therefore free up more cash for saving.
Bear in mind that switching providers usually means signing up to a new contract, and you should check the terms of this before making any changes.You should take particular care when looking at energy and utility suppliers, if you are planning to move- can the contract move home with you? Also check whether you will be charged a leaving fee for moving from your current provider- this is usually only if you are still within their minimum contract period.
You can usually get a better deal from your current supplier simply by talking to them- try it! I was recently able to reduce my mobile phone bill to £11 per month which included unlimited calls, texts and usage! You can find out how I do it here.
If you are sure that your supplier is unable to reduce your bills, even when you have told them of your intent to leave, then you can start looking elsewhere. Do some research and use price comparison sites to quickly find some deals on credit cards, loans, energy, insurances, everything really! You'll be wondering why you never done it years ago.
Identify Your Assetts
Try to think of things off hand that you could use to bulk up your fund. Maybe you have some antique jewellery in the attic? A coin or stamp collection gathering dust? An old Dalton vase that you never actually liked. Anything that can make quick cash should be looked out- this could give you a nice head start in finding cash.
Depending on the situation, you could list items on eBay that are no longer wanted to raise cash. You could also use gumtree or have a yard/ garage sale. Consider whether you have any of the following available to sell:
- Jewellery- antique or precious metals. Broken jewellery can be sold as scrap.
- Designer Accessories- shoes, handbags, sunglasses.
- Musical Instruments- drum kits, guitars, musical accessories.
- Collectables- stamps, baseball cards, coins.
- Antiques- furniture, dolls, toys.
- Clothes- in good condition.
As well as freeing up some cash towards your goal, this also frees up some space, so there is less to pack and lift during the move! Again, check with your bank/ solicitor as to the acceptability of selling items for cash toward your deposit.
Pasta- Your New BFF
This is a hard one for most people to adapt to. It can be difficult to realise that you really can't afford to go out socialising every weekend when you have a deposit to save for, much less if you need it saved quickly.
When I say live frugally, I mean, live as though you are a student with no parental backup! You can't afford to go out eating and drinking, or to the movies, or for a McDonalds, even. Every penny counts. Remember, it won't be that way forever, and it will be well worth it when you have secured your funds and can relax a little. Try some of the following:
- Swap fresh fruit/ veg for frozen/ canned.
- Food shop at budget stores such as Aldi or Lidl- you can half your grocery spend.
- Live on pasta. Not popular with the carb-phobic, but popular with your purse!
- Avoid socialising. Your friends will understand.
- Make all meals at home. (Use leftovers for lunches)
- Take packed lunches.
- Shop in your wardrobe. There is a tonne of stuff you already have. You don't need more.
- Reuse, recycle, repurpose. Furniture, clothes, everything!
All set to save?
It sounds like a lot of hassle, but moving before the big move actually has a lot of benefits.
- If you are selling your home, it means there is no chain. You have already sold to move.
- You have already packed most of your stuff- you just need to unpack essentials for use.
- Relocate to a smaller space- saves cash- more for deposit.
- Allows you to truly identify your forgotten assets.
- Allows you to have a big clear out- you can declutter while you pack.
Aside from this, you can identify alternative accommodation which may be more cost effective. For example, can you move back in with your parents? Do you have a friend with a room to rent? Is anyone overseas who needs their home house- sat while they are away? It sounds mad, but you won't know until you ask! Again, it won't be forever, so it won't be as unbearable as you think!
For myself, I had my partner move into my parent's house with me, and most of his stuff went into storage. A lot of my stuff, too, for that matter. We made sure he had his own section of the room, and we have managed for about 6 months without going crazy! Yay! Plus, all the extra cash that was going towards rent/ electric/ bills etc has been saved. This may not be an ideal solution, but it is a way to free up some cash- think about it!
Get A Second Job
This sounds nuts- surely you want some time to relax. I know. But, if you have some spare evenings or weekends, you could look into getting a second job. You could even put your skills to good use and start your own small business.
A few shifts at a bar would not only earn you some cash, it would also get you some socialising (that I'm sure you'll be desperate for after a few weeks)
Delivering take-aways could be a good option- this may also satisfy your junk food craving if you perhaps get some leftovers at the end of the night?
Carwash or window cleaning service. Bucket, ladders, squeegee/ sponge and you're good to go!
The list is endless! Babysitting, doing chores, personal shopping- there is always something that you can do!
Avoid Additional Borrowing!
While it may be tempting to take the last £500 out of an ATM with your credit card, additional borrowing is a no no. Borrowed money for a deposit is frowned upon by most banks, and your solicitor will want to check the source of these funds in most cases to ensure there is no money laundering occurring within the transaction. Any borrowed amounts can add complications, and may even end in your mortgage offer being withdrawn!
Even receiving cash from a friend or family member can cause complications, as they have to declare that they have no interest on your property- usually in writing. If the cash is borrowed from friends or family, this can lead to further legal costs as declarations and additional contracts have to be drawn up. This is something to clear up with your solicitor in the early stages, so that you know what to expect if you do need some additional help. You should also check with the bank as to their policy on borrowed/ gifted money as part of the deposit funds.
You should now have plenty of ideas to go and gather as much funds as possible! Hopefully, you found a few new ideas here, too.
Personally, I had managed to save £2800 (about $4500) in 6 months by following my own advice. My partner matched it. We were able to get our deposit saved within 6 months, even after a slow start. Next challenge is to save again for a make-over! Wish me luck!
© 2014 Lynsey Harte