Four ways to save for your deposit

1. Help cut the cost of your rent
2. How your family can help
3. Get a hand from the government
4. Be a savvy saver

It can be a real slog saving up to buy your first property, so we asked a few first-time buyers to share their advice on what helped them get a foot on the ladder.

Paying less rent is an obvious way to free up money for a deposit, so think carefully about your rental options.

Save money on a flat-share

To save money on a conventional rental, think about moving in with friends who have a spare bedroom or seek out housemates on flatshare websites. Try to find somewhere near your place of work to save on transport, and don’t miss opportunities to negotiate a deal in a shared property. If one bedroom is a lot smaller than the others, for example, offer to take it in return for paying a lower share of the rent.

Bear in mind that many shared tenancies work on the basis of joint and several liability – meaning all tenants are jointly and individually responsible for paying the rent. If one tenant moves out, the remaining tenants still have to ensure the rent is paid in full.

Try co-living

You might also want to look at co-living developments – where you rent your own bedroom but share communal spaces, such as kitchens and work areas, with other tenants. It’s a bit like living in a grown-up version of student halls. The positives are that you can rent as an individual tenant and bills are usually included, which makes budgeting easier. Prices range widely, though, so do your comparisons carefully.

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There are lots of ways your family might be able to give a helping hand. One option could be to move in with your parents or another family member who might let you pay a low rent – or possibly utility and food bills only – to help you save up more quickly.

Another option is our Family Springboard Mortgage. It allows you to take out a mortgage without having to put down a deposit, as long as a family member or helper pays 10% of the property price as security. They get their money back in five years, with interest, provided you make your mortgage payments on time. If you miss any payments, some of their money may be retained for longer than five years.

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Are you eligible for a government grant or scheme? It’s worth checking before plunging headfirst into saving for a full deposit. There are several ways in which the government is trying to help first-time buyers: the Help to Buy equity loan scheme; and through supporting shared ownership. Bear in mind that these schemes vary depending on where in the UK you plan to buy a home, and that each has its own eligibility criteria.

Shared ownership

Shared ownership lets you buy part of a new-build property and pay rent on the rest, which belongs to a housing association. You can increase the percentage you own by buying further shares in the property (a process known as staircasing). If you ‘staircase’ to 100%, you become an outright owner of the property, but it’s important to check your lease carefully to understand if there are any restrictions. If property prices go up, you’ll pay more for increasing your share; but if they fall, you’ll pay less. If you end up owning the property and decide to sell, the housing association has the first option to buy it back for 21 years from the date you reached 100% ownership.

Shared ownership helped Ranuja Ravindran and her partner Matthew O’Connor buy their own place with housing association Network Homes – something Ranuja believes couldn’t have happened otherwise. “Home ownership is a distant hope for most young people these days, and without shared ownership we simply wouldn’t have been able to purchase,” she says. “We would have been renting indefinitely.”

The couple currently has a 30% share of their property and they’re hoping to increase their share as soon as they can: “To staircase to full ownership in the future would be a dream come true,” says Ranuja. “In the meantime, we still technically have a landlord as we’re paying rent to our housing association; but, this is still better than solely renting.”

Considering shared ownership? Find out if you’re eligible.

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When building up a deposit for her first home, blogger Nazma Noor¹ found a savings plan really helpful. She explains: “I made a spreadsheet to manage my monthly spending and to make sure I was prepared for any large one-off payments. This was a great help in identifying where I was spending most of my money and the areas where I could cut back.”

Nazma also found that having an ISA was invaluable in helping her save: “I used my ISA to the maximum limit, and beyond this I had a savings account which I started using for any savings that went over the ISA limit.” In the 2018/19 tax year, you’ll be able to save up to £20,000 tax-free², but note that if you have a Help to Buy ISA you can’t usually pay into both in the same tax year. Find out more about our range of ISAs.

Friends and family were also key in helping Nazma save. She says: “They create a support network. My friends were super-understanding of my situation and the fact I was cutting back to save for my property. I kept up my social life; but my friends got used to hearing, ‘Can we go for something cheap and cheerful?’ We made use of vouchers and special offers, so we could still enjoy going out for meals and to the cinema.”

Take a look at our top 10 savings tips and keep tabs on your spending with our budget calculator.

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