With the cost of renting almost as high as paying a mortgage, it can be an uphill struggle to save a deposit. Here is how to save a deposit to get a foot on the property ladder instead.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Renting your own place can leave you with little spare money to save for a deposit. If could survive without your own space for 6 - 12 months, consider the following options:
Moving home to live with family for a while will be much cheaper than renting your own place, and should give you the chance to boost the amount you are saving.
If you live near your childhood home, get along well with your parents and they have the space to put you up, it is worth discussing with them.
Talk about how long you will stay, how much rent you will pay, what you will do to help with house chores and how you will divide household bills up front so everyone is happy from the word go.
If you have friends that have a spare room to let, whether they own their property or are renting, it is worth looking at living with them for a little while.
Alternatively, explore the following websites to find a cheap room to rent:
Moving into a shared house is usually cheaper than renting alone, giving you the chance to save up for a place of your own. You just need to make sure you don't spend all the money you save on socialising.
If you live alone and have the space, taking in a lodger can be a great way to help subsidise the cost of renting and give you extra money to save for a deposit.
Before you begin your search for a new flatmate, check your landlord is happy for you to share your property and sub-let a room.
They may decide to advertise the room directly and do one of the following:
Lower your rent in return
Agree to let you find a tenant in exchange for a higher combined rent from you and your new lodger
Either way it will save you money that can go towards your house deposit (you will be able to split the cost of your household bills as well as the rent).
The easiest way to find a lodger you can trust is by asking friends, family, or asking your partner to move in. There are also plenty of websites that allow you to advertise for free or a small charge for a tenant, including those named above.
Paying less rent is a great way to free up more cash for your deposit fund - here are some achievable ways to do this:
Weigh up how many bedrooms you need and look for cheaper accommodation closer to work, so you save on commuting costs.
Downsizing could also mean you save money on heating, council tax and other household bills, so you can put even more money in your deposit fund.
An alternative to renting while you save for a deposit is to become a live-in property guardian at one of the UK's many listed buildings. You could even find yourself living in a castle or stately home.
As a live-in-guardian you would be responsible for keeping an eye on a listed property to ensure it does not fall into disrepair.
The responsibility can be worthwhile as rent for most property guardians is very cheap or even free, so you could save a packet on your living costs.
Visit the Camelot website for more information on becoming a live-in property guardian and to look for properties in your area.
Getting a little help with your deposit can make buying a property more realistic. There are a number of ways to do this:
Help to Buy is a government scheme offered by lenders in England on new build properties.
The scheme provides an equity loan that can be used towards buying a house, if you only have a 5% deposit saved.
You must be over 18 to qualify for Help to Buy, and it must be used to buy your own home on a repayment basis (not interest only).
If your parents are willing and able, borrowing some money to help with a deposit could help you buy your own home sooner than you would otherwise be able to.
You would need to sit down with your parents to discuss how much you would pay back each month, and if they would charge any interest to cover the cost of the loan. Try not to overstretch your budget though, as you and your parents could stand to lose out.
If your parents are willing, make sure they read our guide on how they can help you, including cash gifts, loans, equity release and more.
If borrowing from your parents isn't possible, there are a number of mortgages on the market that allow parents (or anyone else willing) to help you buy a property without having to stump up a cash lump sum.
Getting someone to become a guarantor is a big ask. It usually involves using their home as security for your mortgage or placing a large amount of savings in an account associated with your mortgage for a set period.
No, taking out a loan to cover the cost of your mortgage may mean that lenders won't accept your application.
This is because they will ask where your deposit has come from, and state that it needs to be from a non-repayable source, like savings or a gift.
If finding money for a deposit is holding you back from buying a property you may find a shared ownership home is a more affordable alternative.
Shared ownership and shared equity schemes involve purchasing part of a property and renting the rest, and although you would not own 100% of your home right away, you will have a foot on the property ladder.
You will still need a deposit to get a mortgage for a part buy property, but you would only need to borrow 25%, 50% or 75% of the property value.
For example, to get a 90% mortgage on a 50% share of a £150,000 property you would only need to find a £7,500 deposit, rather than the £15,000 you'd need to buy it outright.
Taking the time to set out clearly what you earn and the cost of all your regular outgoings could help you find areas to cut back and save more money towards a deposit.
The key to a healthy budget is to be sensible in your estimates and to factor in a certain amount of leeway to cover unexpected costs, like car repairs or having to replace household items.
Saving for a deposit will be a lot easier if you get a helping hand from your savings account. Getting a good interest rate could go a big way to helping you reach your goal faster.
Picking the best account will depend on how you plan to save:
You can also benefit from paying less tax on your savings by maximising your full ISA allowance each year. Check out our ISA guide to find out how easy it is to set one up.
Chances are, you would pay a whole lot more on your mortgage and debt interest than you can generate in savings interest, even if you transfer to the best rate available.
If you have worked out your money will be better off being used to pay off your mortgage, think carefully about how much of your savings you should use. You will have plenty of outgoings when you move, so don't leave yourself short.
If you're a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs by comparing the best rates available.