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Advice on saving for a deposit...

Qwerty5
Posts: 6 Forumite

Hi everyone,
I just wondered if people could give me some advice on how I should budget to save a deposit . I’ve finally paid off all debts I have so clear to begin saving.
I just wondered if people could give me some advice on how I should budget to save a deposit . I’ve finally paid off all debts I have so clear to begin saving.
Im in London so deposit will be large and take me a long time. My income is £2218 a month and after all bills I have £1260 left, but this doesn’t include food or travel as both of these I feel can be amended on what I currently spend.
I’m a single woman so I think I can keep food costs pretty low if I stop eating out etc. Realistically how long is it likely to take to save a deposit and has anyone had similar experiences/ Recommend how I should approach saving and tips?
1
Comments
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The advice I would give you would be to save each month the amount that you can comfortably afford without causing you any problems in an account that gives you the highest interest rate. An example would be Saga at 1.2% or NS&I at 1.15% although these rates are likely to drop in the near future.
once you work out what your monthly savings will be you should then be able to work out how long it will take you depending on what your target deposit is0 -
If you are in London and want to buy say a flat at £400,000 then a 15% deposit will be about £60,000
out of your income if you can save £500 a month then that will be approximately £6,000 a year so it will take you 10 years to save the deposit by which time of course the value of the property will probably have gone up up so you will need a further 10 years to catch up
Obviously the more you can save the shorter the time you will have before you reach your target deposit0 -
There is no secret way to raise funds I'm sorry to say. I hope you're young and I'd say enjoy yourself and not get bogged down with owning a property. Even if you could stretch to buy, there are costs to upkeep. Absolutely save as much as you can and see what life has in store for you. Even couples struggle to buy.1
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Yes I am young I’m 26 I suppose though I worry I’ll be mid thirties before I could even hope to buy! But true all I can do is save as best I can0
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You need to figure out both saving a deposit and being able to afford a mortgage.For the mortgage, try putting a few figures in https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/ ... E.g. if you want to spend no more than 1/3 of your income on a mortgage, then that suggests a mortgage of up to £150,000 which would cost £751 a month (leaving other figures in the calculator as the defaults). Or if you would spend up to 1/2 your income on a mortgage, that suggests a mortgage of up to £220,000 which would cost £1102 a month.Supposing you need a minimum 10% deposit (though sometimes it is possible for first-time buyers to have only a 5% deposit), then those figures imply a minimum deposit of around £20,000. (You would also need to a few thousand more saved for other costs of buying.) E.g. buy a property for £170,000 with a £20,000 deposit and £150,000 mortgage. Or buy a £240,000 property with a £20,000 deposit and a £220,000 mortgage.Now, how do those figures fit in with properties you might be happy to buy? Have a quick search on Zoopla or Rightmove if you're not sure.EDIT to add: £220,000 may be more than lenders would be prepared to lend you, even if you were prepared to borrow that much. I'd guess the maximum might be more than £150,000 but less than £220,000.You can choose to save more than a 10% deposit before buying. A bigger deposit generally gets you a lower rate of interest on the mortgage. But of course that delays buying.0
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https://www.moneysavingexpert.com/savings/lifetime-isas/Lifetime ISA (assuming you are eligible) allows you to save up to £4000 a year and government will top up by 25% (so max £1000 bonus per tax year). Can be used for a property up to £450,000 in value.1
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As above , a LISA would seem ideal for you .0
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If you saved £800 a month over 4 years, you would have a deposit of £38,400.
That would give you a decent deposit by the time you are 30. 30 is the average age of a first time buyer in the UK (it's higher in London).
You can generally borrow up to 5x your salary, so add that to your deposit to see what sort of property you might be able to afford.
If you maximised your use of a LISA over 4 years, you would get a £5,000 top up from the government (as you can put up to £4k in a LISA each tax year, you get a 25% bonus, and 4 calendar years would cover 5 tax years). Though, with a LISA you can only buy properties up to £450k, which might be an issue in London if you wanted to buy a property with a partner.0
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