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6 tips on how to save for your mortgage deposit

A YouGov survey revealed 75% of tenants in the private sector want to become homeowners. Yet, the same survey also found that a similar percentage of tenants admit they have no plans to leave rental accommodation any time soon.

Those statistics show the stark truth that, whilst many people want to get on to the property ladder, they are unable to do so because of the difficulties in securing a mortgage.

Passing the obligatory credit check and raising the deposit have become significant obstacles for any potential owner to overcome.

But, while improving a credit score can help with passing a lenders financial checks, saving enough money for a deposit is a daunting prospect.

5% doesn't sound very much

With average house prices in the UK now north of £200,000 a prospective homeowner will have to find at least £10,000 for the 5% deposit which is typically required by most lenders.

Of course, regional variations will come into play but, it's fair to say, the deposit for any property is going to be a substantial figure. This can be very demoralising for new buyers.

However, if you are in the position of having to raise a deposit, or are planning to do so in the future, we've compiled some tips on how you could make the process a little easier:

1 Set your goals

Saving for a house deposit certainly isn't easy and when you look at the final figure you need it can be intimidating.

However, by breaking down the total figure into smaller more achievable targets, you will find the process easier.

Commit to saving a set amount per month and top it up with other savings when you can.

2 Start saving now

I know, I know. It's all very well saying you need to put money away but, when you are spending up to 50% of your income on rent, how is it possible to save anything?

Believe me, I share your pain.

Raising the cash for a deposit will, for most of us, be a long-term process and you will need disciple and patience to build up your cash reserves.

However, if you go ahead and start saving now, even if it’s just a few pounds stashed away every week, you are on the way to achieving your goal.

The best way to start saving is to commit to a regular sum every month. Set up a direct debit from your current account so a fixed amount is transferred into your savings account when your salary is paid.

3 Choose the best savings accounts

Don't just use the savings account you have always had. Shop around and find the best interest paying accounts including those with switch bonuses.

Keep an eye on the market and move your savings to better paying accounts when they are available.

Look at cash ISAs and fixed rate bonds and check out websites such as http://www.moneysavingexpert.com for advice and tips.

Finding high-interest paying accounts will help speed you on your way to your target.

4 Pay less rent

Not as ridiculous as it sounds and no, I'm not advocating you arbitrarily withhold a few quid from your rent payment every month.

But, you should look around and see if you can find a comparable home at a lower rent nearby. Could you downsize in to a smaller place? Find another rental in another location still within commuting distance of your employment? If you can, the difference between rents can be put into your saving account.

There is a caveat here. Don't forget to factor in any fees you would have to pay if moving into a new property. Make sure you do the maths but downsizing is a great way to kick-start your savings.

5 Sub-let a room

If your tenancy agreement allows it, consider sub-letting a room. This is a great way to bring in extra cash which can be added to your savings.

The rent from the sub-let plus contributions to utility bills and other expenses will be a big boost towards you reaching your goals.

6 Check out government help schemes

The government want to encourage home ownership and have various schemes which can help you get on the property ladder.

The gov.uk website has details of these schemes including First Buy and Help to Buy including the Help to Buy ISA which can help you save for your deposit.

Click here for more information on all the current government schemes. Visit the page as often as possible as new incentives are regularly launched.

Now you are on the way to raising your deposit don't forget to register for CreditLadder. It's the easiest way for you to improve your credit score without taking on additional debt or paying any fees. For more information see our FAQs.