Zero to house-buying hero: how to save a mortgage deposit

This time 10 years ago, we were buying a house: our first home, in North Yorkshire. The floors were bare boards, the walls were covered in yellow vinyl wallpaper, and the gas and electricity were on pre-pay meters (on a frozen January night when all the newsagents were closed, I discovered this the hard way). The garden, used by the previous occupants as a landfill site, was devoid of lawn and covered in knee-high brambles.

We had saved a 10% mortgage deposit and bought our red-brick terrace at the top of the market, just before the credit crunch came whomping on house prices and equity. When we sold up two years ago to move to Greater Manchester, the house prices in the local area had just drifted their way back up to pre-crunch levels so despite all the home improvements, we made little on the sale.

Were these trials and tribulations? Pah! Not at all. They meant nothing: instead, I was (and am) grateful, relieved and rather amazed that we’d managed to claw our way onto the housing ladder in the first place.

As it turns out, our house-buying timing was beaut: a week after we moved in, banks began tightening lending requirements and pulling fixed-rate repayment deals left, right and centre. While we made little when we sold up, we had built up a good chunk of equity via mortgage payments and when possible, overpayments.

It was difficult enough to be buying a house back then; it’s even tougher now. The economy is looking dodge, mortgage lenders want would-be customers to walk through fire – and on top of it all, increases in the cost of living make the prospect of saving a mortgage deposit seem more daunting than ever.

Something I have learned, however, is that while the prospect of saving for a mortgage deposit can be daunting, the truth is that unless you are set on buying in London or somewhere else with crazy prices, it can be done. Drastic lifestyle changes, budget makeovers and the sourcing of extra streams of income may be required, but it can be done. In my case, we moved up north, where you could – and still do – get a lot more bang for your buck. I lived extremely frugally, to pack away as much of my salary as possible. I did a lot of eBay selling, reselling and more besides. We got there.

Gleeson Homes, a housebuilder with a strong base here in the North of England, approached me to make some short videos about my tips and ideas for saving for a deposit. It was an interesting company with which to collaborate: Gleeson specialises in low-cost homes for first-time buyers on modest incomes. In a Guardian profile, which you can read here, the chief executive describes the typical customers as “a Sheffield bus driver and his shopworker wife on a combined income of £34,000 a year.” (See what I mean about bang for your buck? Move north. Come join us!)

If you are currently saving for a mortgage deposit, or know somebody who is, you can find all six videos playlisted on my YouTube channel. I have copied partial transcriptions below. There are a number of tips here and, although they won’t all be suitable for everyone, there are plenty of tips to go around.

1. It’s all about mindset.

When you begin to save for your first house, you will be told that you need to save vast sums of money, that it’s going to take you forever, that you’re going to need to overhaul your lifestyle… Actually, that’s not always true. Thanks to homebuilder schemes and government assistance schemes, such as Help to Buy, the sums you need to save and the amount of time you need to save for can be less than you would expect. For example, it could take just 6 to 12 months to save the amount you need for that first deposit.

Attitude is all important. You need to fix that budget. Work out how much you intend to bring home every month on top of your regular pay packet. I’m of the opinion that if you are in full-time work, you should be able to bring home an extra £200 to £500 per month.

2. Cut those household expenses

If you are looking to slash your monthly outgoings, the quickest and easiest way to do this is to take a good look at your monthly household expenses: what you are spending on utility bills and what you are spending at the supermarket every month.

Every three months, have a look at the direct debits and standing orders that are coming out. Never let them auto-renew. When a contract nears its end, shop around, get a cheaper deal. I bet you will find something that is less money and more value.

Secondly, supermarket shopping. I’m a very careful shopper: I shop right at the end of the week on a Sunday, an hour before closing. That’s when you get the best whoopsies: those yellow stickers with the steep discounts. The discounts get steeper and steeper as the day comes to a close.

I shop from the bottom shelf where items are cheaper. When shopping for fresh produce, I look at the back of the shelf where the best-before dates tend to be far lengthier.

Finally, if you haven’t done so already, I would recommend that you invest in a slow-cooker. It’s a secret weapon if you are looking to save money on your household expenses. Firstly, it uses less electricity than the regular cooker. Secondly, you will get back home from work every day to a delicious cooked dinner ready and waiting for you. So, none of those expensive last minute dashes to the supermarket on your way back from work, or worse, takeaways.

3. Get over your FOMO

One of the easiest ways to haemorrhage cash is on lots of nights out with your friends. So you need to get over your FOMO (‘Fear of Missing Out’). What you will find, perhaps to your surprise, is that a lot of the time you aren’t really missing out on much at all! Instead, make a night out into a special occasion.

Secondly, gyms. Lots of us love going to the gym. But if you don’t feel that you are getting good value for money from your gym membership, consider one of the free alternatives instead: running, running apps, such as Couch to 5K, or my personal favorite, the Green Gym. This is where keep fit meets conservation projects around the UK: planting trees, sowing meadows and more. Apparently the Green Gym can burn up to a third more calories than an aerobics class.

Finally, holidays. We all love hot, sunny overseas holidays but, if the pound continues to flounder, there are cheaper options. Stay within the UK. This doesn’t have to mean camping or caravanning, if these aren’t your things. You can have a quirky adventure, such as barn hopping in the Lake District. For £10 a night, stay in a farmer’s barn: it’s an interesting way to tour that region. Or draw upon homestay networks, such as Airbnb. There’s an option out there for everyone.

4. Sell that clutter

If you are looking to make extra income on the side, purge your personal belongings and sell off your unwanted junk. However it’s a mistake to think that this process begins and ends with eBay. As wonderful as eBay is, I have found other great sites and apps out there, where I get good prices.

For books, CDs and DVDs, I use sites like Ziffit, webuybooks, and musicMagpie. Fashion? The app Depop is great for selling fashion items. If you have lots of supermarket and high street clothes, try selling them in job lots on local Facebook selling pages.

Don’t forget good old car boot sales. If it’s not car booting season, check out an app called Shpock, which stands for Shop in my Pocket. It’s a virtual car boot sale. You can advertise your belongings on there for free. And if you’re in the market for a bargain, it’s also a good place to go hunting.

5. Find your side hustle

Side hustle: making some extra cash on the side. A side hustle will help you reach your house saving deposit target faster. Side hustle is an American term. It means additional stream of income. So if you have several side hustles, you have several streams of income. So far so good, but do you know how to find a side hustle? How do you know which side hustle is right for you?

It’s simple. You need to draw upon your available time, your skills and your expertise. For example, there are sites out there like upwork.com where people are seeking to purchase time, skills, expertise on a project basis or by the hour. Virtual PA, for example, bookkeeping, graphic design.

Another example of a side hustle is blogging. Blogging is my side hustle. That’s how I make my extra cash on the side, and it’s a great way to do it. If you need get started, but there are lots of free guides out there.

Finally, if you have found that by purging your belongings by selling your things online, that you have a knack for this and you have a knack for getting really good prices, why not make that your side hustle? You can pick up items at car boot sales and jumble sales for a fraction of the price for which you then sell them. There’s a side hustle out there for everybody.

6. Maximise those savings

Finally, if you are looking to to maximize your savings towards that deposit for your first home, there are some really good assistance schemes out there to help you get there faster. For example, the Help to Buy: Equity Loan. This is when you are buying a new-build home from a Help to Buy registered home builder and you have 5% of your deposit saved. The Government will contribute an additional 20%.

Another one is the Help to Buy: ISA. This is when you save the money for your deposit within a specific type of ISA account and the Government will top it up by 25%. As you can imagine, however, these schemes do come with lots of terms and conditions attached, so do check them out thoroughly online to ensure that you are eligible.

If you are saving to buy your first home: good luck. Keep saving, keep boosting those savings – and keep going. You will do it. 

The videos in this post were produced in collaboration with Gleeson Homes.