The best ways to start saving for a property

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The best ways to start saving for a property

In recent years, trends in the wider economy and the property sector may seem more discouraging to home buyers, and particularly first time home buyers. Reports of millennials planning for the prospect of renting for most of their lives, and worries about a scarcity of starter homes would make climbing on to the property ladder seem like an impossible task.

The prospect of fully owning a property may at first seem like a fantasy. Yet, the introduction of new housing schemes in recent years, and increased guidance on savings, can help budding home owners. These would-be buyers can meet the challenges with the drive and know-how to build up savings fast.

Though saving for a house deposit is not easy, it doesn’t have to be an exhausting or seemingly never-ending task. Effective budgeting and cost cutting are essential steps to saving for a property. However, this doesn’t mean living a life of drudgery without expense. Armed with sound financial wisdom, amassing the funds required to secure your first property becomes an achievable task. Getting on the property ladder helps provide a level of financial security as well as other benefits home ownership provides.

Setting Something Aside: the bedrock of savings

Most property mortgages cover about 80-90% of a property’s cost. This means that around 10-20% of a property price must be in the form of a deposit. Some mortgage lenders are adapting to the current state of the market. Lenders are offering mortgages that require up front deposits as small as 5% of the property’s value. A larger mortgage will require larger monthly repayments, thus a higher deposit helps reduce mortgage payments. One helpful step toward reaching a deposit can be seeking out a family loan. However, even if this is not an option, there are still many other ways to reach a minimum deposit.

The most effective step to amassing a large savings pool is to set money aside directly from your wages. Taking money directly out of wages reduces the hassle of saving. It and feels more painless than anxiously considering saving as a loss directly from your available spending. By setting the money aside before you spend, you are more likely to set aside more in savings. This reduces the likelihood you will be dipping into savings after your usual weekly or monthly expenses. Setting up a direct debit or standing order is also an option. These can be used to automatically transfer money to a savings account each month.

There are also many payroll saving schemes to incentivise this approach to saving. These come interest rate bonuses without affecting your ability to quickly and easily access the money you have put aside. Surveys suggest that a large number of people are failing to set aside money at all. The hassle of saving is a frequently cited reason for this. Thus, payroll saving is an effective and foundational step in building up a considerable savings pot.

Smart Cost Cutting: savings without severity

In the event that you start saving by directly taking the money from your payroll, much of your saving then comes down to adjusting your lifestyle choices to match your new budget. In the event that you don’t take the saving directly from your wages, you must also make conscious changes to your weekly and monthly expenses to leave yourself a comfortable sum of leftover money at the end of the month.

These adjustments don’t mean an existence subsisting as though you are just above the poverty line, but come down to small adjustments to help you spot the common and every day expenses you incur that are not necessary and often wasteful. Saving is not a matter of cutting a large part of your life out of the picture, but trimming the unnecessary excesses from your budget that you often won’t even know are there, or mistakenly believe bring you larger benefits than they really do.

The Weekly Spends: the excess fat in our weekly budgets

Though small savings in our weekly expense may not seem like much in isolation, annually these savings add up to considerable sums. They can substantially contribute to our savings to build up to a property deposit. This is because a reassessment of our habits is effective way in helping us save more.

Weekly saving begins at the grocery shop. Food is usually our most considerable spend outside of rent. The key to saving on groceries is planning your shop in advance. A change as simple as writing a list saves shoppers around £200 a year, as it helps shoppers to resist the temptations of deals and offers that might motivate overspending. Another considerable way to save on groceries is to not turn your nose up at cheaper stores, but to fully take advantage of the savings they offer. The growing popularity of chains like LIDL and ALDI prove that spending less does not mean reduced quality.

Bringing the list-writing philosophy into more of your spending habits will better help you decide what are the inessential and essential expenses you habitually make each week. Cutting down on bad habits, like quitting smoking, is one example that brings bonuses to both your wallet and your health. Other steps include a reassessment of your utility and insurance bills. This will help ensure that you are paying the correct rate for the amount that you use. Alternatively, consider making changes to your usage habits to bring these bills down.

Increasing Income: seeking a raise or promotion

As well as saving measures, there are also opportunities to increase income. Seeking a promotion, combined with savings directly from a payroll, will significantly help you on your way to a housing deposit. Getting promoted comes hand in hand in with possessing and broadcasting clear career goals to your boss. A clear route to promotion lies in making clear your particular talents and leadership potential. Seek out learning opportunities and demonstrate your indispensable contribution to an area of the company’s work. Make your potential clear by engaging more with the company and your boss, as well as networking effectively and have a clear way to record and show your development and achievements. This will help make securing a promotion, or a raise, an easier task.

A Second Job: in person or online

Another way to boost income is to seek money outside your main job through a side business or occupation. One of the simplest ways to do this is to start selling on the second hand market. This can be through online retailers like eBay or at a car boot sale. Not only will this net you money for unwanted and unused goods, but the money usually spent on their maintenance will be an additional saving to your weekly budget. This could include selling unused, or unnecessary second vehicles, and more effectively planning journeys by car-pooling or public transport to bring down spending on fuel.

The online market has also opened up a world of part time work that is more accessible than ever, and often only requires a car. Whether you are taxiing people or delivering orders, there is always need for more work in these areas. The internet has also made job service platforms like Fiverr incredibly popular. These platforms allow users to sell a particular skill or talent to a massive pool of waiting customers, usually without needing to leave their own home.

On top of this comes the potential to rent out a spare room on AirB&B, or on a more permanent basis through an estate agent. These income channels can add considerable sums to your week on week income to compliment savings made on your spending. It all adds up to that deposit for your property.

Wrap up

Though finding the money for buying a property, or reaching a deposit might seem at first like an unsurmountable task, creating a spending plan, setting aside routine sums for savings, and reassessing habits can help bring about large savings in a realistic time frame, turning what at first seemed like a daydream into an achievable goal that draws closer with every pay cheque. The healthy financial habits prompted by saving for a deposit will likely stick with a home buyer long after they have acquired a property, allowing money to be more effectively saved, allocated and spent on the items and experiences that matter the most.