If you’re currently renting your home and dream of buying somewhere, one of the stumbling blocks is likely to be that age-old conundrum: how do you save thousands when you’re paying rent every month? While it might not seem possible, there are some innovative ways to help.
One mortgage broker has come up with 12 ways that it says could add up to as much as £7,130 saved in just one year. That’s enough to put you well on your way – or get you over the line.
Mojo Mortgages has compiled a list of tips designed to help aspiring first-time buyers boost their house deposit. It said the strategies could significantly increase savings beyond what is directly set aside, potentially adding up to £7,130 to a deposit.
12 ways to boost your house deposit by £7,130
Work from home two days per week and save up to £1,006 per year
A study conducted by business comparison website, Bionic, found that the average full-time office worker spends £95.48 per week commuting to the office and eating out during their lunch break. However, for those who work a hybrid role (two to three days in the office), this figure reduces to £76.12, a saving of £19.36. Over a year, this is a saving of £1,006. So, if you have the option of working from home for two to three days per week, this could help your deposit grow much quicker.
Set up a Lifetime ISA and receive up to £1,000 per year
A Lifetime Individual Savings Account (LISA) is a tax-free savings account in the UK that allows individuals aged 18 to 39 to save up to £4,000 per year towards their first home or retirement. The government provides a 25% bonus on the amount saved each year, up to a maximum of £1,000 annually – meaning if you save the maximum of £4,000, you’ll get an extra £1,000 from the government.
Switch your bank account to gain up to £1,000 for free
Many banks frequently offer cash bonuses of £100 to £200 – or sometimes even more – to entice new customers to switch their current accounts. In fact, Money.co.uk will do it all for you for free through its Current Account Switch Service.
There is no limit to how many times you can switch accounts and claim these cash bonuses, as long as you meet each bank’s specific requirements, like setting up direct debits, paying in a minimum amount and so on. In fact, some savvy customers have reported earning more than £1,000 just from switching accounts repeatedly over a few years.
Do, however, note that if you’re planning to purchase a property in the next six months, you should refrain from switching bank accounts during this period. Each switch typically involves a credit check, which is recorded on your credit file. While occasional switches are generally not a major concern, multiple applications within a short timeframe may raise concerns with potential mortgage lenders.
Cut your eating out habits in half to save up to £610 per year
According to Nimblefins, the average UK household spends £1,220 on eating out each year, which includes takeaways and dining at restaurants. Therefore, cutting this expense in half could save you up to £610 per year without having to give it up entirely.
Start a dog-walking service with your neighbours to save up to £585 per year
Many pet owners have to hire a professional dog walking service while they work, which costs an average of £11.25 per walk. Over a year, this amounts to £585 per year for one walk per week. To eliminate this cost, you could consider speaking to your dog-owner neighbours and ask if they’d partake in a rotating dog walking service, where you take it in turns to walk each other’s dogs, therefore, saving you the cost of hiring a dog walker.
Avoid branded food to save up to £538 per year
Did you know that switching from branded food items to generic or shop-branded items could save you up to 30% of your food shopping bill? So, given that the average person spends £1,793 on grocery shopping each year, a 30% saving would amount to £538.
Sell your unwanted items to make an extra £341
Research by PayPal found that the average adult has an estimated £341 worth of unwanted items gathering dust around the home that could be sold. So why not spend an upcoming day off work uploading your unwanted items onto a second-hand selling website? You’ll save on space, too.
Switch to a sim-only phone deal to save up to £321 per year
The mobile phone comparison experts at Uswitch uncovered that switching from a mobile and SIM deal to a SIM-only deal at the end of your contract could save you an average of £321 per year. The savings come from avoiding the higher monthly costs of paying off a new device as part of a traditional contract. So if your handset is working and you don’t feel the need to upgrade it to the latest phone, you could make a big saving.
Make a packed lunch to save up to £320 per year
Research by the job and recruitment website Reed found that the average person spends around £10.77 per week on a meal deal. However, making a homemade version of the same sandwich with crisps and a drink costs just £4.60. Whilst a weekly saving of £6.17 may not seem like a lot, it amounts to an overall saving of £320.84 per year.
The same study also found that those who tend to buy a restaurant or cafe lunch tend to spend around £32.40 per week, which amounts to a whopping £1,648 per year. Therefore, there are much bigger savings to be made if you switch to homemade sandwiches (£1,445.20).
Use cashback websites to earn an average of £300 per year
While you may be wondering ‘why would I spend money when I’m trying to save?’, there may be times when you have no choice but to purchase something while saving for a deposit. Perhaps you need a new pair of shoes for work, or a present, or your washing machine breaks.
Whatever you buy, make sure to check whether the website is on a cashback website such as TopCashback or Quidco. TopCashback states that their average user earns more than £300 per year in cashback on their regular online purchases.
Pay for your car insurance annually to save an average of £59 per year
If you can afford to pay for your car insurance annually, instead of monthly, this can save you an average of £59 per year. The savings come from avoiding the interest charges for paying in instalments. Previous research also shows that the optimum time to buy your car insurance is 20-26 days beforehand so set a calendar reminder to do this to get the best deal too.
Install a smart meter to save up to £50 per year
According to research by The Behavioural Insights Team, a smart reader can save an average of 3.4% of electricity consumption, and 3.0% of gas consumption. For a medium-sized house (three to four bedrooms), the average household spends £1,690 on electricity and gas bills per year. Therefore, using a smart meter – which is free to install – would save a household £50 per year.
Mojo Mortgages said the savings mentioned were potential estimates and could vary on individual circumstances. The tips were provided for informational purposes and were not guaranteed to produce the same results for everyone. However, while not every tip may suit your lifestyle, implementing even a few could make a difference in building up that deposit as a first-time buyer.
