If you are looking to save for your first mortgage deposit for your first home and struggling to do so, we have compiled here a list of helpful tips to give you some saving ideas you may not have thought of. If you currently feel like it’s an uphill task, don’t worry. You are not alone in thinking this way. Saving for a down payment might seem like a daunting task for first-time homebuyers.

Save money by cutting the cost of rental payments

Saving money by paying less rent can be a significant contribution towards meeting your saving goal. It is therefore a good idea to consider your rental situation and what options are open to you.

• Home-sharing
• Co-living

Cut back and save with home-sharing

As an alternative to renting an apartment on your own, consider living with friends who have spare rooms or looking for housemates on flat share websites. This presents a good option to think about. Keep in mind that if you’re looking for a location that’s close to work, you’ll save money on transportation costs. Consider taking a smaller room in exchange for a reduced rent if one of the rooms is much smaller than the rest. When it comes to shared property, there is usually an opportunity for a negotiated deal.

While the above option is worth considering, be aware that joint and multiple responsibility is a common tenant policy, which means that each renter is jointly and individually accountable for the rent. Despite the fact that one renter may leave, the other tenants must still pay the rent.

Co-living

Co-living arrangements – where you rent your own room but share common rooms like kitchens and work areas with other renters – are another option to consider. It’s like living in a more upscale version of a dorm for college students. As a renter, you’ll be able to rent as an individual, and your utility expenses are normally included in the rent. This arrangement is particularly useful for accurate budgeting as rent and bills will be the same each month. However, prices might vary greatly, so be sure to do thorough comparisons.

Help from family members

“There are numerous ways your family might be able to provide a helping hand,” noted Jamie Johnson, CEO of FJP Investment. “For example, one possibility may be to move in with your parents or another family member who would allow you to pay a reduced rent – or even utilities and food costs only – to help you speed up saving,” continued Mr. Johnson.

Another possible option to consider is that some lenders offer a kind of family mortgage. For example, the Barclays Family Springboard Mortgage entails a family member or other financial helper agreeing to put down 10% of the property’s value as security. You can avoid having to put down a down payment on your mortgage. In five years’ time, they will receive their money back in full, plus interest, providing you make your mortgage payments on schedule. The risk to the family member or friend helping you is that there’s a possibility that part of their money will be held for a period longer than five years if you fail to make your payments on time.

Government help

A government grant or programme may be available to you if you are eligible. Before starting to save for a down payment, be sure you’ve double-checked to see if help is available for you. There are various ways in which the government is seeking to aid first-time buyers: the Help to Buy equity loan scheme; and via encouraging shared ownership. Keep in mind that these programmes have different qualifying requirements depending on where you want to buy a house in the UK.

Help to buy equity loan

The government will finance up to 20% of the cost of a newly built home with an equity loan. The benefit of this loan is a smaller down payment required; the cash deposit is only 5% of the total; and a cheaper monthly mortgage payment. Because of the greater cost of real estate in London, the government offers a London Help to Buy equity credit that covers up to 40% of the purchase price. Note that the scheme is solely accessible in England, while comparable systems exist in Scotland and Wales. Northern Ireland does not yet have any such schemes available.

The loan is interest free for the first five years, which means that it works out to be a better deal than a 100% mortgage. For first-time buyers, not having to pay interest on the loan for the first five years can amount to a considerable saving.

Shared ownership with others (part buy,  part rent)

Purchasing a portion of a newly constructed property while paying rent on the other portion, which is owned by a housing association, is known as “shared ownership.” You can increase the proportion you hold by buying extra shares in the property as your financial situation improves. This is known as “staircasing.”

If you manage to “staircase” to 100 percent, you become an absolute owner of the property, but it’s vital to review your lease carefully to determine if there are any limits. Rising and falling market conditions mean that, if property values go up, you’ll pay more to grow your share; but if they decrease, you’ll pay less. Another requirement is that if you manage to buy the property outright, you must give the housing association first refusal to buy it back for 21 years. This commences from the time you 100% own the property.

Quick tips for saving

Draft a budget and stick to it

One of the easiest ways to save money for anything is to make a budget and adhere to it. A spreadsheet is often the best choice to record  your incomings and outgoings. When it becomes clear how much you have each month, you may start to dedicate your cash, particularly towards your mortgage deposit savings.

Transfer funds into your savings account automatically

Another great option to save for your mortgage is to have the money routinely moved into a savings account intended particularly for this goal. You won’t even notice that you’re saving money this way, and the total will easily mount up over time.

Sell belongings that you don’t use or need

One fantastic way to generate some additional money for your house deposit is to sell goods you no longer need or want. There’s probably stuff in your house that you don’t need, whether it’s clothes, furniture, or equipment.

Reduce unnecessary spending

Saving money for your mortgage can also be accomplished by reducing the amount of money spent on items that you don’t really have to. Things like restaurants, takeaways, streaming TV, and luxury items can all be reduced or eliminated without any hardship.

You can start by going through your bank account with a magnifying glass to see what direct debits and standing orders you have out that you no longer need. Netflix, gym memberships that you don’t really use anymore, magazine subscriptions. The potential list is endless.