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The Fastest Ways First Time Buyers Can Save Money

Updated: Nov 17, 2021


Trying to save money for a mortgage deposit can seem like an extremely difficult task for most people, especially first time buyers.


The average price for a house in the UK is just north of £250,000, so to be able to put down the minimum 5% deposit, you would need £12,500.


In this article, I will share some effective tactics that will help you save money quickly for a mortgage deposit!


Set A Savings Target


If you don't know what you're aiming at, how do you expect to hit it?


The best way to save a lot of money quickly is to set a target. Write down how much you want to save per month, and how much you think you could save per month.


They're probably different amounts, but always choose the higher one, as long as it is realistic.


If you aim high, you're more likely to save more than you did if you aimed low!


It's a tricky balancing act, but you have to have a goal in mind to be able to consistently save the money you need.


Cut Out Unnecessary Spending


This is the obvious tactic, but you have to really analyse what you're spending your money on.


We all spend money on things we don't necessarily need to (I've bought a smartwatch that I never used!), and if we're in a phase of our life where we want to save a significant amount of money, then this sort of spending needs to be cut out ruthlessly.


Consider not buying so much "luxury" food every week, check what monthly subscriptions you are actually using (if you haven't used it for three months, get rid of it) and walk or cycle instead of driving for short journeys.


You can use my free budget spreadsheet to help you get started with this!


Monetize Your Free Time


If you have some free time during the evenings or weekends, why not use that time to make some money for a mortgage deposit?


You could take on a part-time job such as delivering leaflets or driving for Uber. Or you could start a side hustle such as Matched Betting, answering online surveys or flipping items online. You could potentially earn yourself hundreds of extra pounds to put towards your mortgage deposit.


Invest Your Current Savings In A Lifetime ISA


Lifetime ISA's are a good option for those looking to buy a house for the first time.


You can contribute up to £4,000 per year to a Lifetime ISA (LISA). But the best thing about it is the government top up your contribution with a 25% bonus.


So if you invested £4,000, the government would give you £1,000!


This makes the process of saving up for a house a lot quicker for first time buyers, although there are strict restrictions on when you can withdraw the money.


You can only withdraw the money from a LISA without incurring a fee if the following criteria apply:


You've had the LISA open for at least 12 months

You're using the funds to pay for a mortgage deposit on a house that is worth under £450,000

When you're 60 years old

If you become terminally ill


If you are not eligible to withdraw, the government will charge you 25%, and you'll actually lose money (because 25% of £5,000 is £1250, so there's a net £250 loss, using the earlier example)




Saving For A Deposit Can Be Easier Than You Think


Implementing these tactics will help you save for a mortgage deposit much quicker. Setting a savings target gives you a clear number in your mind and can provide some extra motivation.


Reducing unnecessary spending will free up more of the money you currently earn. Once you've reduced your expenses, earning money from a secondary job or side hustle will help you increase your income, if you have the time to do so.


And finally setting up a Lifetime ISA will boost your savings by 25% every year, helping you reach your target even quicker. But be wary of the factors that can incur a withdrawal fee.


Need an effective tool to help you keep track of your expenses and boost your savings potential? Consider downloading this spreadsheet which will help you keep track of your spending. It will give you a crystal clear view of how you could save more money to put towards your mortgage deposit!


If you found this article helpful, please consider buying me a coffee on Ko-Fi. All coffees will be reinvested back into the site and not held in an offshore tax haven.

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