If you’ve set yourself a year to save up for a house deposit then it’s going to be a stretch. The average time it takes to achieve this is three and a half years for a couple and 13.5 years for a single person, according to estate agent Hamptons International[1].
Government schemes like the Help to Buy equity loan did assist first-time buyers in acquiring homes by offering financial assistance to those meeting certain eligibility criteria however this ended on 31st March 2023. There are a number of potential alternative ways in which you may be able to get onto the property ladder and some of them can be seen here
How much you need to borrow will dictate how much you need to save, but on average the deposit needed to buy a home is £32,321
Still want to do it in a year? Here’s our no-holds-barred seven-step guide to scraping it together.
Stop partying
Recent research by a national bar operator[2] revealed that on average 26-30 year olds spend £66 on a night out, and that 40% of young drinkers go out at least once a week. Fun though this lifestyle sounds, that’s nearly £300 a month being spent. If you can abstain for a year, you’ll save on average approximately £3,000 (or if you’re a couple, £6,000).
But don’t feel you’re a party pooper. The UK is getting healthier and fitter at the moment and spending on alcohol and cigarettes is dropping fast - down by nearly half since 2000. And according to the British Heart Foundation, 83% of 16 to 24 year olds attain the recommended but minimum level of physical activity to stay healthy[3].
Consulting a financial advisor can provide valuable insights on budget planning and help avoid being 'house poor.
Cancel your holiday plans
According to Lloyds Bank the average cost of going on holiday is now £1,400, so if you're a couple then that's another £2,800 saved[4].
And if you're an average-sized family then your annual holiday costs over £3,000, according to holiday protection scheme ATOL. Its research also shows how holidays can be money pits. ATOL says on average families spend 17% or £536 more on their holiday than they were expecting[5].
"Holidays are a great way to relax and switch off, but this can all be ruined if people overspend abroad," says travel expert and TV presenter Simon Read.
"While we know budgeting and finances are not a top holiday priority it is important not to lose control completely. Foreign currency, changing exchange rates and excitable family members can all lead to budgeting confusion when you are away."
Sell your car
Unless you need a car to get to work or live in the countryside, it’s a luxury. And it could be another couple of grand added to your savings.
Even if you drive an old car and do just 10,000 miles a year then your likely spend, according to hire company Autoeurope, on average £168,000 during your life on running you car, which includes £45,000 on petrol[6].
What about Vinted or Ebay!
Depending on who you ask, the average home has between £400 and £1,000 of unwanted or unused items within it that could be sold online - give it a go!
Get a Lifetime ISA
The Lifetime Individual Savings Account (LISA for short) is a tax-free savings account to which the government adds 25% of your total saved.
A LISA is available to open for anyone who is aged between 18-40 and is designed for someone who is looking to save towards a home, or indeed retirement - or both!
You can put in up to £4,000 each year, until you’re 50. You must make your first payment into your ISA before you’re 40.
The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.
It’s free money – why not take it? Read more about it here.
Rent a smaller flat
It sounds extreme, but why not? For example, the difference in rent between a studio apartment and a one-bedroom flat in London is £3,900 a year[7]. Or move to a cheaper area. For example, the difference between the cheapest and most expensive weekly rent for properties near tube stations on London’s Central Line is £4659[8.]
Shared ownership schemes allow individuals to buy a portion of a property while paying rent on the remaining share. This can be a stepping stone for those unable to buy a home outright, providing both financial and emotional benefits.
CreditLadder can help you improve your credit score
If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.
CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.
Remember the information provided in this article is for information purposes only and should not be considered as advice.
Sources
[1] Hamptons International
[2] Deltic Group
[3] BHF
[4] Lloyds Banking Group
[5] CAA
[6] Express
[7] Rightmove London rental data 2017
[9] Totally Money
CreditLadder can help you improve your credit score
If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.
CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.
Remember the information provided in this article is for information purposes only and should not be considered as advice.
