Deposits, letting agent fees, and rent are increasing in price. Here is a guide on how to pay your deposit and whether you should consider using a credit card or borrowing the money.
How should I pay my deposit?
Your method of payment is up to your letting agent or your landlord, but they may let you pay by:
Private landlords sometimes accept cash. If you do pay with cash, secure a receipt in case you need proof of the amount of your payment in the future.
If you already have the money saved up, using this usually is your cheapest option. If you can not yet afford a deposit, you need to either borrow the money or save up.
How do I save up for a deposit?
You can save for a deposit by setting aside as much as you can afford every month into a savings account. Increase the amount that you can save by:
Decreasing your cost of living
Sticking to a budget
Could you borrow the money for the rent instead?
If you do not have enough saved for a deposit, you could borrow money and pay it back over several months. However, the interest you pay may make it much more costly than using the money that you have saved. Paying back a loan could also make it more difficult to afford your rent.
Some landlords typically prefer tenants who have saved up enough cash for a deposit. This is because it shows that you are financially reliable.
Some might not allow you to rent their property if you are in debt because you could find it hard to afford your rent and the repayments for your loan.
Can you pay a deposit using a credit card?
Yes, some leasing agents allow you to pay your deposit using a credit card. However, they often charge you a fee of 2% of the deposit amount or more.
Private landlords and some letting agents usually do not accept credit card payments.
This is because landlords can not usually accept credit card payments, and they cost more for letting agents process the payments.
Suppose you decide to pay by using your credit card. In that case, you could pick one that offers interest-free purchases, allowing you to pay back the deposit amount over several months without interest charges.
Can you borrow from family or friends?
If your family, parents, or friends can loan you the money for your deposit, this could be a much cheaper option, especially if they do not charge you interest.
Ensure that you get your deposit back
When you move out, you should get your deposit back if you:
- Make on-time payments for your rent
- Don’t damage anything whilst you live in the place
- Make the property tidy and clean when you move out
- Follow the terms of your tenancy agreement
Check if your money will be safe.
Estate agents and landlords cannot keep your deposit in their own bank accounts. They are required to pay it into a Tenancy Deposit Plan (TDP).
This helps to prevent them from spending the money. It also gives you the extra protection that could assist you in getting your money back when you move out.