With the average price of homes in the UK hitting a record high of £254,606, saving money to buy a home may seem like a daunting task. However, with the right plan in place, it can certainly be achieved! Here are a few of our top tips for saving for a mortgage.
Examine and Reduce Monthly Bills
This may seem obvious but reducing your monthly outgoing bills is a great way to divert more money into your savings for a deposit. A few ways to look at your bills include:
- Examine and streamline monthly subscriptions: streaming services (Netflix, Spotify, etc), gym memberships, news subscriptions, food delivery memberships, and more
- Compare pricing and find promotions for mobile phone contracts and broadband subscriptions, use a switching service like look after my bills to help!
- If you live alone, apply for a Council Tax Discount. You could get your bill reduced by 25%
- Reduce energy bills by conserving energy and consider switching your energy tariff to a different provider to save on bills
Use Technology and Apps to Streamline Spending
Technology advancements and apps are helping hundreds of thousands of people reach their financial goals every day. Here are a few notable financial apps worth checking out:
- Money Dashboard: helps to organise your spending into different categories amongst other features. This allows you to focus on areas to reduce spending and budget more efficiently
- Portify: analyses your income and expenditure to give you bills alerts, an expense predictor to stop you going into an overdraft, cashflow analysis and it identifies your priority bills so you don’t hurt your credit score. It also helps to build healthy credit through partnerships with all of the major Credit Reference Agencies in the UK: Experian, Equifax and TransUnion (this is key when applying for a mortgage!).
- Emma: helps users by avoiding overdrafts, finding wasteful subscriptions and giving the control you need over your finances.
Make a Budget, Cut Down on Daily Spending to Save For A Mortgage
The best advice is also usually the most obvious. The fact is that daily spending adds up, even on the smallest transactions and when you’re saving for a mortgage, every little counts.
A good example of daily spending adding up over time revolves around a small transaction like a cup of coffee. According to the Independent, “the average British person will drink 676 cups of coffee a year”. If you multiply that number by the average cost of a cup of coffee in London (£3), that brings total spendings to £2,028/year. By eliminating this daily expenditure, you can save quite a bit at a faster rate!
Be sure to regularly check your bank statements and make note of what you are spending on over time. Most banks have smartphone apps that help organize spending into different categories such as groceries, bills, entertainment, etc. Take a look at areas that can easily be reduced in order to save for a mortgage more quickly.
Use Credit Cards Responsibly to Earn Money as You Spend
If your credit allows for it, consider getting a rewards or cash back credit card and using it for usual expenses. Cash back credit cards offer a way to earn while you spend. They work by giving you a percentage of each purchase back in the form of cash back.
To get the maximum benefits from cash back credit cards, it’s best to use it for all of your everyday spending but never charge more than you can pay off. The most important detail is to repay the full balance each month. Using credit cards properly can also increase your credit score which will help when you decide to apply for a mortgage.
Consider a Side Hustle Second Source of Income
The opportunities for self employment or a side hustle are virtually limitless and oftentimes all it takes is a good idea to get started. In fact, nearly 4.37 million people in the UK have a side hustle of sorts and that number continues to grow.
If you are looking for a mortgage for a buy-to-let property to make that your second income stream check out Molo!
The hardest working people can boost their income in order to increase their deposit savings. One thing to note is how a second job can affect taxes owed in the UK.