How to save a deposit for your home

1: Work out a budget

Before you start viewing homes you need to decide how much money you can comfortably afford to repay each month. Take a look at your bank statements and get an understanding of your monthly overheads. Track all recurring essential expenses, like rent, utilities, your weekly groceries, transport expenses and other financial commitments like a car loan, childcare or maintenance payments. This will help you get a picture of your essential living costs.

2: Make savings where you can

If you're serious about saving, then you'll need to think about cutting back some of the non-essentials. Individually, life's little luxuries may seem small but over 12 months they can add up to a large chunk of your income. Go through a few months’ bank statements, adding up the cost of each treat, to work out how much you spend on these extras. Once you've decided what you can cut out you can include this extra cash in your savings budget.

Use our mortgage calculator to establish how much you can afford to borrow. You'll then you’ll know your deposit target and can start saving towards it.

3: Set up a savings account

Simplify your plan by opening a dedicated savings account. Give it a motivational name, like 'My Dream Home', so you know exactly why you're squirrelling away your funds each month. Set up a monthly direct debit that goes straight from your current account to your savings account when you get paid.

Automating your savings will make it easier to save and to work out just how quickly you can reach your target. Automating your savings and rent also demonstrates a strong savings pattern to your bank.

4: Get your finances in order

Any outstanding loans you have could limit the amount you can save for a deposit. Look at credit card bills and other borrowings, and ensure you are paying down everything as efficiently as you can.

For more information on getting mortgage ready and top tips, signup to get your First Time Buyer e-book today.