Don’t Have Money for a Deposit on a Home? Do These Things First

The struggle for first-time buyers getting on to the property ladder is a well-reported news item at the moment. Rock bottom interest rates, rising house prices and a suggestion that rates will not start raising for a couple of years has seen the property market receive an influx of first-time buyers. These first-time buyers may have built up the deposit themselves, gone in with a partner or sibling or their parents. Those who don’t have the right deposit amount are using the Government’s Help to Buy scheme or have signed up for shared ownership. For those who wish to build up a deposit the conventional way, some will think it impossible to save up a 20-25% deposit in the next three to five years.

Many of my peers are stuck in this particular situation. There’s no doubt that we’re all keen to get on the ladder and start building home equity (instead of ‘throwing our money away on rent’) but the current house prices are leaving us with little choice about building up a deposit quickly enough. Our complaints are becoming a broken record.

Five Things You Can Do Whilst Saving For a Deposit

1. Do Your Research
Do you really know how much of a deposit you need? Do you even know how much your property is going to be? It’s not just a deposit that you’ll need money for. Do you know what other fees are involved? Do you know what the steps are that you’re going to take when you start looking? I’ve been reading How to Buy Your First Home and Which? Property Investor’s Handbook. If your savings plan only accounts for the deposit you’ll need to add another several thousand pounds for administration fees.

2. Build a Solid Credit Rating
Start building your credit rating and score i.e. improve your eligibility for a mortgage? Check your credit score and go from there.

3. Cut Back Your Spending
This may sound obvious but you need to be realistic about cutting back. Savings don’t magically occur…you have to make changes.

4. Find a Mentor
Is there someone you admire who has what you want? Talk to them. Ask them to be your mentor. Gaining the wisdom of others will help bring you closer to your goals and keep you motivated.

5. Monitor the Area You Want to Buy In
Keeping an eye on any developments that are due to take place in your desired location is important as this will help with forward planning. Developments may impact on the price of your first home negatively or positively. Keeping abreast of the news in this area will help make sure you don’t buy in an area that will cause you to instantly plummet into negative equity.

Are you a first-time buyer with other tips? How long did it take you to build up your deposit and how prepared were you before you made your first property purchase?

*Image courtesy of suphakit73 at FreeDigitalPhotos.net