How do people save a mortgage deposit?

[Bananapuppy]

Exactly that- any advice welcome please!
Three children and associated childcare costs, renting, two incomes but at the lower end of the salary scale (£27K & £20K). We just don’t seem to have any money to save and we’re desperate to buy our own home.
All the very helpful advice online suggests not drinking (we don’t), not going on holiday (again, we don’t), not having an expensive car (you get the picture…). Basically, a whole range of cuts to luxuries which are out of our means anyway.
Any tips on real-life savings/ mortgage planning would be so gratefully received.

I will just add, in anticipation of the comments, that this isn’t simply a case of hideously bad life planning. I met my exH at 16 and spent 10 years in an awfully abusive relationship.
I left at 26 with nothing, but now 4 years on have a lovely DP, secure job, and am trying to get my life in order. Buying a house is the next sensible (yet seemingly out of reach) step.

Dp and i bought our house 18months ago with a 5% deposit. I had our wages go into the main joint account, same with the bills coming out. We transferred a set amount to our own current accounts for the month each and i took the savings out and put them into a savings account with a different bank. We saved about 1k a month, 1.5k at a really hard push. We were earning around 30k each at that point. Im part time now and bring in 20k a year now so saving is alot harder but i can manage 4-500 a month now

Thank you @VanCleefArpels- no bank of mum and dad, and no looming inheritance to be had either 😄. The uncertainty and long term cost of renting aren’t great for us- but you’re definitely right that it isn’t the end of the world!

@Bargebill19 Ah thank you- has you’ve said this isn’t really an option for us right now but I really appreciate you taking the time to reply, thanks! We might manage a few hours here and there but there doesn’t really seem to be anything of that flexibility around at the moment.

Thanks @LivingLaVidaCovid. Hopefully not completely unachievable, we will try our best. Obviously the children are a bit non negotiable given that they are already alive 😄. We don’t go on holiday, don’t buy new clothes/things, we live in a cheaper area, we don’t have the option to move in with family. I think we might need to investigate side ventures.

Thank you @Faranth, it’s quite reassuring to see that it isn’t just us. Really glad you managed to buy.

@Guavafish Thank you, but unless I work when asleep I don’t think so. I work 37 hours a week, study 14 hours a week, and have 3 children < 8.

I was fortunate enough to be given the deposit from my parents (back in the 1980s). But my friend lived in a bedsit for three years to save up her deposit.

Ah sorry I didn't mean to be depressing!!!
I meant if all although things remain equal you won't be able to save for a deposit so you need to work on shifting the scales.

Either decrease outgoings or increase income.

It might be worth focusing on side hussles to up income as I'm guessing you can't decrease outgoings much.

Also read up on FIRE (financial independence retire early) this might give you some good tips

I highly recommend looking into a Monzo bank account. My DH and I are already on the property ladder but in terms of saving money... weve managed to save quite a bit with Monzo because it has very good budgeting tools built into the app. Check it out. It's difficult to give more advice without specific break down of income and costs. It will be difficult with 3 kids already I imagine. You need to work out how much you need to save and how long it will take even if it means 5-10 years of saving. You financial circumstances will hopefully improve income wise in that time too.

How much deposit do you need?

How much would you need?
I didn’t have kids and lived in a house share which isn’t for everyone. Obviously the kids are there so that’s not an option for you!

Ah sorry everyone I should have included that. Realistically we will need to save about £15,000,(£10,000 if we use a help to buy scheme). The aim would be in five years. So we’re not talking unimaginable amounts, but not negligible either.

No don’t worry @LivingLaVidaCovid, it is a bit depressing but quite true 😄. I will look at FIRE, thank you!

I think £10-£15k is achievable in that time frame. Slowly but surely will be the way to go. If we say £12k over 60 months, topped up to £15k if it's in a help to buy ISA that's £200 a month - how achievable does that feel?

(Although keep in mine there are additional costs associated with buying a house and prices may rise).

Make sure you're claiming any benefits you're entitled to liked to studying etc.

I won't make suggestions about how to spend less as it sounds like you're pretty on it with that anyway, but a long look at a few months of bank statements can be quite sobering.

£15,000 in 5 years is £250 a month.

If - hypothetically speaking - you transferred that £250 out at the start of the month as soon as you were paid, and didn’t touch it, what would you be going without? How would you bridge that gap?

Have a look into budgeting with YNAB. It really forces you to take a hard look at everything you spend money on.

@Andthenanothercupoftea

I think £10-£15k is achievable in that time frame. Slowly but surely will be the way to go. If we say £12k over 60 months, topped up to £15k if it's in a help to buy ISA that's £200 a month - how achievable does that feel?

(Although keep in mine there are additional costs associated with buying a house and prices may rise).

Make sure you're claiming any benefits you're entitled to liked to studying etc.

I won't make suggestions about how to spend less as it sounds like you're pretty on it with that anyway, but a long look at a few months of bank statements can be quite sobering.

HtB closed, only an option if you had already opened an account.

LISA is 25% top up, up to £4k per year, £1k bonus, per person.

House prices will be higher in 5 years time. How much? Who knows.

Hi @CassandraTrotter, thanks for commenting, 100% mortgages don’t seem to exist anymore, unless with a guarantor.

@snailex Wow- that’s impressive! We live in privately rented accommodation so no RTB but I will research different investment methods, thank you.

@TheYearOfSmallThings Thank you! I will try! That was a rather lovely comment. We don’t need a huge amount, it just seems a bit unattainable at the moment.

Thank you @Fleurty, If we moved into a studio flat now we might remove the need for a house by killing each other first 😄. One solution I suppose!

@Sleeplessem Oooh I might be able to tutor. Thank you - will look into that. I don’t think we’d consider shared ownership. Very dear friend is trapped into a SO property at the moment with ever rising costs. I know there are positives but I’d be nervous.

“While the equity loan is interest-free for the first five years, costs can ramp up fast from the sixth year. You’ll need to pay both your monthly mortgage payments and interest on your equity loan – and the interest rate will increase by RPI plus 1% each year. Many people try to pay back the loan after five years, either by saving up the cash or remortgaging their existing loan to unlock equity. But finding a remortgaging deal to cover the loan can also be challenging, as few lenders offer them. Keep in mind you’ll also need to pay back the percentage of your home’s current value, not the amount you originally borrowed.

Read more: www.which.co.uk/news/2019/06/three-in-five-people-with-help-to-buy-equity-loans-didnt-need-one-nao/ - Which?”

I’d avoid a help to buy scheme if possible. The repayment stipulations are ridiculous.

No hobbies
Very little family time
Both working two jobs so utterly exhausted all the time.

Not even there yet and DC2 is en route 😂 we live in such an expensive part of the country even with 30k saved we won't be able to get much of a mortgage with PT nursery fees affecting affordability. Shared ownership is probably going to be our only option and we earn £70-80k between us.

I hate it when posters assuming on MN but here I go anyway 🤭

I’m assuming you’re doing it with the OU since it’s PT and you’re working FT, if so, I don’t know exactly where you are in your studies L1/2/3/4 (?) but i just wanted to make you aware (if you’re not already, if you are ignore me) you can get certificates to mark each level.

So; CertHE then DipHE then BSc then you get the full on MEng at the end. The first three are (Open) but the MEng is (Engineering). Still super valuable for finding new jobs in the interim. Most that I’m studying with have found new jobs over the last few years.

I am with you when it comes to online advice being mostly useless, the first thing anyone does is restrict outgoings but with childcare I think it’s almost impossible. How old are they? Do you have anything spare at all? E.g. my DP pits £30 into a savings account every month and has done for ten years!!!! It’s not noticeable, at all, but next year he’ll have nearly £4K and he hasn’t notified it going. I’m not suggesting you do anything over that longer period but anything tiny you have smash it into savings even if it seems tiny.

@lilyofthewasteland Thank you for your post.
Please don’t worry that I’m unhappy and/or pinning all my hopes on buying a house. Apologies if this is how my post comes across.
It would be good financially in the long run, it would be nice for us to be able to adapt a house to our preferences, it would feel more secure for the DCs. However, it absolutely isn’t the be all and end all of my life. I have a lovely happy life and enjoy every minute- just also trying to plan for the future!
You are probably correct that there is an element of ‘the life I would have led if…’, but I have come to accept that all I can do is make the most of what I have- which non-materialistically is quite a lot!

Also do you have a regular savers account? There are few semi decent ones out there given how low overall savings rates are. You and DH could get one each, at least make what you are saving work harder for you.

Would you be open to CASS switching to certain banks, there are some decent offers with over £100. I have a few friends that have a CASS switching account with 2 direct debits and just CASS switch to get the incentive. Can get a few hundred quid a year that way depending on what banks are in the market. There are a few current accounts that pay around 2% on cash balances. I’d have a look at them too. Every little helps.

HTB equity loan is coming to a close soon I think, there are pros and cons.

Re shared ownership, i don’t know loads about it, but I would say do some of your own research and don’t listen to horror stories.

I read you’re doing an MEng, that’s amazing. I bet you could earn some decent money with exam prep for GCSEs, a levels and maybe degree if you’re in a Uni town.

One thing I did last year was start to declutter and I sold things on Facebook marketplace. Sometimes only for a couple of pounds but every time something got sold I put the money into a separate savings account. Those £2, £3, £5 and £10 soon add up to a good amount (a few hundred in my case). And as a bonus I owned less stuff at the end of it and the house felt less cluttered.
I found when I was saving for my deposit that every pound was helpful and small amounts add up.

If you are looking to get £15k over 5years - and tutoring is a possibility, then have you thought if one of you could find two hours a night to clean offices? £650 per month for two easy hours work. Or one weekend night cleaning a warehouse more week would also do.

First things first you need to tell yourself you ARE doing this. Not questioning can you do this.

First go through all of last months bank transactions. Where exactly did every penny go.

Next print out a 52 week challenge and stick it on your bedroom wall. You want to do 15k in 5 years. Try 10k in 1 year - (You will likely fail but even if you only achieve half of that you are still double your original £2.5k goal).

Then split your monthly income by the amount of weeks; each week, try to save as much money as physically possible. Consider every purchase. Slowly clear through the house and check the sold prices for EVERYTHING on ebay, and sell. Even empty iphone boxes sell for £20. At the end of the week take your earnings and put them in a savings account (call it savings buffer), find the 'week' with the closest corresponding amount and put this amount in ANOTHER savings account (call it House Deposit Buffer). Tick off the week on the wall chart.

Start at 0 next week, and add your weekly budget amount and try to spend as little as possible again. Slowly your savings buffer account will accumulate by itself small amounts, allowing you to make the bigger deposits on the week challenge without any extra effort.

This sounds silly like your just moving money about and its all a faff. But it will make you focus on every penny, and its really not that far fetched. You probably easily waste £50 a week on average either in the food shop or essential purchases you could find cheaper, or on switching to better deals for utilities etc. Thats already £2600.

And you could probably find £2.5k of junk in your home that you were going to throw in the bin.

Good luck

Overtime, overtime and overtime.

We don't have kids, we won't have any inheritance, we private rent and we both earn about 27k each normally. My job allows overtime and I have done a every shift under the sun to save our deposit.

We also utilised a Lifetime Isa. The two of us are both first time buyers, In the last year and 8 months we have managed to save £50k (6k was from from our lifetime ISA bonuses).

We have ignored our birthdays, not done anything for Christmas etc. Not gone out to eat, no trips, no gifts, zeroed our expenditure to just the cheapest foods. (We actually went out for our first meal out in that time this week!).

We are 5k away from our 15% deposit and then need to work on fees etc.

(But there are no houses that suit us on the market now!).

'If your life is fulfilling and manageable right now why do you need to be climbing any ladders?*'
*
Because:

a) renting can make you feel incredibly vulnerable in a society which doesn't afford you the same rights as other countries do

b) she wants to be able to give her children an inheritance so they're not in the same position as her

I did it by scrimping on absolutely everything. No treats at all, no nice days out, no takeaways or nice food/restaurants. I moved out at 20 though and was paying a third of my wage to my mum in rent. At the time I was on around £10k and my ex was on about £18k.
There's no way I'd have been able to save if I'd had kids early.
I didn't get a car until I was 33 and delayed children until I was 35 (and only have 1 as I can't realistically afford more).
I now earn 3 times more money but my new house is almost 3 times the value of my first house.

My son and daughter in law are having the same problem, they just cannot afford anything and they are 40 now,. We all get on very well so we have agreed that they will move to Somerset from the south east as it's so much cheaper and we're buying a home together, I'm single and work full time. I rattle around my house..
We're buying a big old place 2/3rds funded by me and I'll be living in the granny annexe and taking care of the garden which is my hobby (they love the garden but hate gardening). But I have my own completely separate entrance because neither of us want to see each other everyday.

In most cases I know of, people do so before producing children.