Buying A Home – How To Raise The Deposit

Getting one foot on the property ladder.

For every first time buyer there is one big obstacle: the deposit. You might have a fairly healthy income, no debts and be more than ready to own your own place. However, if you don’t have that 10 – 25% deposit then you’re not going to get off the starting blocks. House prices have risen 6.9% a year since the 1980s and every time the price of property goes up so too does the size of the deposit you need to even make a mortgage application. If you were buying in the 1980s, when the average property was worth $58,000, your deposit would be an achievable $5,800 - $14,500. Today, it’s more like $33,000+. So, how do you raise the deposit for a home?

Stop paying rent

The big transition from renter to owner is where the tough money choices really kick in. For many, the only way to start accumulating a deposit is to stop paying hard earned cash to a landlord. With rents higher than they have ever been it’s even more important to break that cycle. If you want to take rent out of the equation then there are ways to do it, from moving home to your parents, to taking a cheaper room, subletting (with the landlord’s permission) or finding a temporary job that’s live in and rent free. Living with your parents again might not be ideal but it's a great way to save money and, with a little persuasion, they may even help you out by acting as a guarantor for a guarantor loan that could help you buy your own place sooner.

Start planning for serious savings

Rent is probably the biggest expense to consider but there are other ways to start putting cash aside too – every little helps.

  • Work out your mandatory expenses (e.g. rent, utilities)
  • Reduce any mandatory costs that you can
  • Identify everything you buy that is a ‘luxury’ and don’t spend on it anymore
  • Look at your discretionary expenses and see where cuts can be made

Boost your income

There are many opportunities for earning extra cash these days thanks to the digital marketplace and the gig economy. Driving a taxi at the weekend, selling piano lessons or doing freelance proofreading or coding work on the side can all bring in essential extra cash. You might also want to consider asking for a pay rise at work – renegotiating your worth to your boss can be a useful career move, as well as increasing your salary at the end of every month. It might also be a good idea to start selling items you no longer need. Anything from old records, to a car, old phones and books can all raise cash that you can put towards your first home.

The bank of mum and dad

Some families save to provide children with their first deposit, for others this just isn’t an option. However, it’s always worth checking whether you can get some help from someone in the family. Equity release can be an easy way for older relatives to help younger family members towards a deposit. It means a homeowner can use what they have already paid off to generate income for that first down payment.