The Building Societies Association latest survey (June 2021), which spoke to over 2000 UK adults, has found that getting a large enough deposit together is seen as the biggest obstacle in buying a property.
59% of those asked expressed concerns over the amount of a deposit that’s required; this is up from 40% from the same time last year. 50% of those who took part in the survey believed that house prices would continue to rise which obviously impacts on the amount required for a deposit. This would seem to be reasonable logic since demand and increased property values doesn’t seem to have faltered over the last two years; encouraged by the governments Stamp Duty holiday and incentives to mortgage providers.
To illustrate the pace with which house prices are climbing, along with the necessary deposits required by first-time buyers, April saw an increase of 9%, bringing the average price of a UK home to £232,554. Even with a 5% deposit, this requires savings of £11, 628 and a 10% deposit, the optimum amount required to achieve a good interest rate, a sum amounting to £23,255!
Whilst we have written previously on the best ways to build a deposit, sometimes more ‘radical’ ‘outside the box’ thinking might be required in addition to those previous suggestions, that included various forms of savings, to help build your deposit further.
Paying rent can have a seriously detrimental impact on the amount you are able to save. With this in mind, it is worth considering moving back in with your parents; if the thought of this is too much to bear, perhaps consider asking an Aunty, Uncle or even a good friend? The £400 to £600, often more, a month that you would save in rent will make a huge contribution to your deposit fund over a few months. If this just isn’t possible, try downsizing to the smallest home you can get away with. Yes; you might well be living in chaos, but this is temporary – short term pain for a long-term gain.
If there is just yourself or perhaps just you and your partner, you might want to consider ‘House Sitting’ for a few months. Whilst this might sound ridiculous, it’s a way of living comfortably and rent free! What you need to understand is that property owners, across the UK, are crying out for people to look after their homes and pets whilst they’re away on business, holiday or any type of long-term, extended leave. ‘Trustedhousesitters.com’ is one such specialist that recognises such a requirement. Through its website, it pairs potential house-sitters with homeowners. To illustrate how effective this can be, one couple managed to save, over a two - year period and 22 different house sittings, a sum of £12,000 that would have been paid in rent!
There are other money saving and raising ideas too that can all add up – helping you to building up that all important deposit. For example, If clothes have been ‘your thing’ and you find yourself in possession of designer dresses, shoe’s and handbags, you might want to consider using ‘rentmywardrobe.com’ and for those that spend on take-away’s and ready food, you could download the ‘Olio’ app. This connects you to a network of people and restaurants looking to ‘offload’ rather than waste surplus fresh food.
Whilst some of these suggestions appear low impact and seemingly small, over a few months they conspire to help make a big difference and the more you can save towards a deposit, the better the mortgage rate you will achieve.
For further advice and tips on becoming mortgage ready, speak to an independent specialist like Dunham McCarthy. The only thing that a consultation will cost you is a little of your time.