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Buying a house is a dream for many people, and one that, for some, may seem an impossible dream. In the news recently is the fact that the average deposit, for a first-time buyer, has risen from £15,000 in 2006 to over £32,000 in 2016. The average house price, for first-time buyers, has just reached over £200,000, making buying your first home more expensive than ever before.
Cost of renting v buying
The monthly cost of renting has now outstripped the monthly cost of a paying a mortgage in many parts of the UK. This means that those who are renting are paying out more each money for a roof over their heads, and therefore have less money to save towards buying a house.
For these people, buying a house may seem like an impossible dream. Even though the monthly repayments may be more affordable than renting, the thought of saving up the average £32,000 deposit just makes buying a house seem a pipe dream!
However, although it is a huge amount of money to save for a deposit – it is NOT impossible. If you set your mind to it, you will be able to do it. By following the steps below you will find that you could be a homeowner in no time at all.
What do you really want?
A great place to start is by asking yourself the following questions. How much do you want to own your own house? Is it something that you might quite like? Or is it something that you REALLY WANT?
If it is something that you really want, then it is much more likely to happen.
This following is a great example of how the language that you use can impact on the outcome. If you say “I will TRY to get that done by tomorrow” it actually means that you have no intention of doing it. It is true! Listen to yourself the next time you say “try” and think about your intention!
I now catch myself when I am about to say “try” and either say “I WILL get that done by tomorrow” or “sorry, I won’t be able to do that.” It works.
Think about this in relation to buying your house – I will TRY to save some money each month just won’t work! Therefore, phrasing your intention for your house is really important. “I WILL have a deposit of £32,00 to buy a house by 2022.”
Build your dream
Once you have set the intention that you WILL be buying a house, then you can start to get excited about it.
Get onto the property websites and start choosing your dream home. Find one with furniture that you really like too and start saving the pictures of it. Create a mood board or a pinterest board.
Start thinking about it as though you are already living in it. Imagine coming home from work, opening that door and think about how you feel as you get home to your lovely, cosy house.
Start looking in shops for furniture, for pictures, cushions, kitchen utensils – then visualise how these things are going to look in your new house.
You could even go and look at houses – get excited about it and feel the thrill of the purchase, as well as the thrill of living in it. I imagine that you get the idea by now!
The more connected you are to your dream, the more likely that it will become your reality.
Buying a house - planning your journey
Firstly, when would you realistically like to buy this house? Let’s set a goal of 5 year’s time. Work out how much you need to save each year so that you can buy it. Let's go for that average deposit of £32,000 in 5 year’s time and work out how to do it, without making yourself miserable in the meantime.
Get help to buy
If you are under 40, then open a Lifetime ISA (LISA). You can pay in up to £4000 per year, and the government will add 25%. If you save the full £4000 each year, you will get a £1000 bonus. Paying in the full £4000 each year can get you up to £33,000 bonus from the government! The money has to be used as a deposit for your first home, or taken out after the age of 60 for your retirement.
If you save the full £4000 per year over a 5 year period, you will get £5000 free from the government, which is a great bonus towards to your £32,000 deposit.
If you choose a cash LISA then the best interest rate currently is 1.4%, which would net you another £908
Add another £1000
Download my Top Tips to Make £1000 quickly and you will have another £1000 saved towards your mortgage deposit.
Now instead of £32,000, you only need to save £25092 over the 5 year period. I am it sure still sounds like a whole lot of money, but let’s break it down a little. It’s £5018 per year. Or £418 per month. £97 per week. I hope that breaking it down makes it sound a little more achievable now. Don’t worry if it doesn’t – it’s going to get a whole lot easier shortly. The following tips will help you to save £97 per week, which you can then put into your LISA.
Let's get rid of £2 first by starting a £2 jar. Save all your £2 coins in a jar – simple! Save £2
Another simple change is to quit the wee extras. Things like a coffee and a cake, a magazine or a couple of pints a week. How easy would it be to save that every week? Save £10
This works by simply shifting down a brand in everything that you buy from the supermarket. If you normally buy own brand, then try the value range? Shift down a level for everything that you buy and you will really see the difference. Use the calculator to work out how much you could save. Save £20
Reduce all your other expenses. Take a couple of hours and compare, compare, compare. Insurances, utilities, TV, broadband, Home phone, mobiles – the lot! Go through them all and see where you can reduce costs. Save £20
Reduce your transport costs.
Walk, bike, car share etc – anything to reduce your transport costs. Save £15
The present challenge
You could cut back on presents. The average person spends over £857 on presents each year – why not set a £10 limit for each person on your list. Get creative – you can make home-made gifts or search for amazing bargains throughout the year. This post has some fantastic suggestions for home-made gifts. Save £15
Increase your income
Spending some time a couple of times a week doing paid surveys can be a useful way of earning a few quid extra. Earn £5
There are some amazing apps out there that can help you to easily increase your income. Forget Snapchat or Facebook and instead use your commuter time or your lunch hour productively. Earn £10
Weekly total £97.
To ensure that you will achieve your dream, I suggest setting up a standing order to come out of your account immediately after pay day. That way, the money is gone and you will soon get used to putting away that amount each month.
To keep you motivated you might like to set up a savings app and automate the payments into it. Alternatively you might like to set up a visual reminder at home and keep reminding yourself of the importance of this for you.
What do you think then? Does buying a house and saving for a deposit now seems much more achievable?
Another great way of saving is by using Plum or Chip! They honestly make saving seem fun, easy and achievable - read more about them here.
Don't forget to download my "Top tips to make £1000 quickly" and get that deposit off to a great start!
Why not pop along and join my Your Money Sorted group? I would love to help to keep you motivated and excited about your new purchase, as well as sharing lots of inspiration around making the most of your money.
I am Eileen Adamson, Your Money Sorted coach, working online with UK based women. I can help you to develop a better relationship with money and feel calm, relaxed and positive about money. This will allow you to feel confident, in control and able to make good financial decisions. Through creating a good relationship with money you can then live the life that YOU want to lead.