With the average property price in Belsize Park over £900,000 and more than £750,000 in Stanmore, the thought of saving the deposit to buy in either of these desirable London locations can be daunting. Even the absolute minimum 5% deposit will, if you hope to purchase a £900,000 home, set you back a cool £45,000.
But help is at hand. Follow these simple steps and the job of saving might not be so daunting after all.
The right account
The first thing you’ll need to do is decide which account to start saving in. Over time, this decision could earn you huge sums in interest.
If your plan is to save on a short-term basis, regular savings accounts can earn you a decent rate of interest as for a fixed term, normally around 12 months, you’ll keep your deposit locked up with them.
On a long-term basis, cash ISAs offer great rates of interest but you’ll struggle to save the whole deposit in one – the maximum you can invest during 2016 is £15,240.
Work it out
There are a lot of online savings calculators available. These are incredibly useful to work out exactly how much you can feasibly save.
Don’t make this an afterthought, use the online calculator to divide your expenses before deciding on the kind of property you’re after. Committing to a larger purchase than you can afford will make the process of home buying far more difficult than it needs to be. Be very clear about your expectations from the very beginning.
Of course, if you have your heart set on a particular type of property there is always the option to save for longer – but don’t forget how buoyant the London property market can be.
Direct to the source
Once you've decided how much you can save and where these savings will go, set up a direct debit. Not only is this the easiest way to save, it’s the most painless too.
With a direct debit you’ll quickly become accustomed to having less of a monthly income – it’s hard to miss something that was never really there in the first place.
Be thrifty
In the end, saving enough money for a home deposit does come down to everyday changes. Without a large cash sum to get you going it’s really important that you make subtle lifestyle tweaks to make the whole process more manageable.
If you’re buying with a partner and you own more than one vehicle get rid of it. One should be enough, especially when committing to a purchase in an area like Belsize Park or Stanmore with great transport links.
Shop around for energy deals. All the money you save in gas and electricity in your current home can be funnelled back to your growing savings account; it’s a very serendipitous way of making positive steps toward your future home.
