Rent, deposits and letting agent fees are rising in price. Here's how to pay your deposit and whether you should consider borrowing the money or using a credit card.
This is up to your landlord or letting agent, but they may let you pay by:
Some private landlords accept cash. If you pay with cash, ask for a receipt in case you need proof of how much you paid in the future.
If you have the money saved up already, using this is usually your cheapest option. If you can't afford a deposit yet, you need to save up or borrow the money.
You can save a deposit by putting as much as you can afford each month into a savings account. Increase how much you can save by:
Here is how to choose a savings account that suits your needs.
Most landlords charge at least one month's rent for a deposit, and often more. Letting agents usually charge for referencing and other admin fees. The average rent per month in the UK is around £710.
If you do not have enough saved for a deposit, you could borrow money and pay it back over several months.
But the interest you pay can make it much more expensive than using money you have saved. Paying back a loan can also make it harder for you to afford your rent.
Landlords usually prefer tenants who have saved up enough cash for a deposit. This is because it shows you are financially reliable.
Some might not rent their property to you if you are in debt because you could struggle to afford your rent as well as your loan repayments.
Landlords and letting agents usually run reference and credit checks before they offer you a property. They could see that you have borrowed money from your bank statement or credit record.
Yes, some letting agents let you pay your deposit by credit card. But they often charge a fee of 2% of the deposit amount or more.
Private landlords almost never accept credit card payments, and some letting agents do not accept them either.
This is because landlords can't usually take credit card payments, and they cost more for letting agents to process.
If you decide to pay by credit card, you could choose one that offers interest free purchases. This could let you pay back the deposit amount over several months with no interest charges.
There are several ways to borrow money, including:
Make sure you can afford the repayments on top of your rent and the rest of your living costs before you apply for any type of loan.
If your parents, family or friends can lend you money for your deposit, this could work out much cheaper, especially if they charge no interest.
Here are the pros and cons of borrowing from family or friends.
You should get your deposit back when you move out if you:
Keep to the terms of your tenancy agreement
Pay your rent on time
Avoid damaging anything while you live there
Tidy and clean the property when you move out
Landlords and estate agents can't keep your deposit in their own bank account: they have to pay it into a Tenancy Deposit Plan (TDP).
This stops them spending it and gives you extra protection that could help you get your money back when you move out.
If your landlord does not give your deposit back, you may be able to get it back from the TDP scheme. You could also take your landlord to court to get your money back.
While your landlord is responsible for your home, you still need to protect your belongings while you rent. Compare home insurance policies to find the right cover for less.