Despite all the warnings about salaries not keeping up with house price rises, you shouldn’t give up on your dream of scaling the property ladder. It’s possible that the next couple of years could see a “correction” in property prices – maybe up to a third – and so if you’ve got a lump sum all ready to go, you could be in clover.
Here’s what you need to do.
Make a budget
Work out what you earn and what you spend each month and year. This budget should include both regular and occasional outgoings so that unexpected costs (like boiler repairs) are factored in.
Once you have all your figures to hand, you can see where to make cutbacks. By far the easiest things to get discounts or reductions on are your utility bills, phone tariffs, TV subscriptions and insurance policies.
Pay down debts faster
Your debts have interest applied to them, so if you can pay them off earlier, then there’s fewer months with that interest being taken out of your finances. Talk to Creditfix to see if you can consolidate your debts, or just to get advice on managing your debts better. This will, over time, leave more money free to go into your deposit fund.
Pay less rent
Most rents these days cost more than a mortgage, so this can make it doubly difficult to set any money aside. If you can pay less money each month, or even stop renting altogether, then that’s a hefty wedge you could be putting away.
You could either downsize or move a bit further out from the city to get a cheaper rental, as long as this doesn’t bump up your commuting costs.
Alternatively, you could go back to your parents for a year or so. You must make an agreement about how much keep you’ll pay and how much housework you’ll do so that everyone’s happy.
Make your savings work harder
Don’t just put your money into any old savings account every month and then leave it. You could put it into another account with a better interest rate so that you achieve your goal a bit sooner. You could also use an ISA so your savings are tax-free.
Look over the interest rates offered by the banks every month or so to see if there’s a better one available for you. Be careful about early withdrawal penalties – it might be better to open instant access ISAs so you can move your money more easily.
Take on another job
No-one’s suggesting that you stack shelves in a supermarket at night and never sleep. You could do a bit of tutoring if you have a particular expertise, you could walk dogs at weekends or do a couple of shifts at your local pub.
Use more own-brands
Almost everyone who switches to own-brand foods doesn’t really notice the difference, especially with staples like pasta, tinned tomatoes, tinned tuna and frozen vegetables. You might find some own-brands are actually better than the ones you used to buy, so give everything a go.