Those who are trying to get on the property ladder understand how challenging it can be. In amongst the mountain of paperwork, rising house prices and achieving a good credit score, there seems to be an infinite amount of hoops to jump through. But before you even get to that point, the initial stage is saving the money for a mortgage deposit. Deposits can be anywhere from £10,800 to £25,000- depending on the property itself and the location, but generally, a 5% deposit is required and the bank or building society will cover the rest. While it may seem like an impossible task, there are plenty of tips and tricks to help you save for a mortgage deposit, and here at We Buy Any Home we have compiled our top 10 tips to save for a mortgage.
Tip #1- Return Home:
Once people fly the nest, they swear they will never return home, as the independence of living in your own space is contagious. However, living with parents often offers us luxuries that we can’t take advantage of once we leave home. Moving back in at home is significantly cheaper than renting your own place or flat sharing, and can give you a way to save for a mortgage or get loans for land purchases in place if that’s the way you are planning on going. This is a beneficial tip if you live near your family home, get along with your parents and if they have space for you to move back in.
Tip #2- Reduce Your Bills:
Perhaps the most cost-effective way of saving is to reduce your outgoing bills at your current property. There are a few ways you can do this, firstly by cancelling unused subscriptions such as TV and music streaming, gyms or clubs, or switching your energy bills to cheaper tariffs. Becoming more cost effective by reducing the amount spent on food shopping, or ensuring to turn off lights and running taps, or taking shorter showers can help reduce outgoing bills.
Tip #3- Get a Lodger:
If you live alone and have space, taking on a lodger is a great way to help you save while reducing the cost of your rent. However, prior to doing this you should check that the landlord is happy for you to share your property and sublet.
Tip #4- Get a Helping Hand:
Asking for help can make all the difference in terms of saving for a mortgage. ‘Help to buy’ schemes are offered by the government provides an equity loan that can contribute to you buying your own home- and require only a 5% deposit. Although the likelihood of you repaying the loan is quite high (each scheme is different), it can provide a helping hand if you want to get onto the property ladder.
Tip #5- Budget Wisely:
It’s so easy to spend money frivolously on items that we don’t necessarily need. When saving for a house, making a strict budget is vital. To do this, take the time to set out how much you earn monthly and all your regular outgoings. Find areas where you can cut back on money, perhaps the budget for shopping nights out- expenses that aren’t essential.
Tip #6- Savings:
Make your savings work harder and opt to get a savings account with a good interest rate. By doing this, you could reach your target goal much faster. However, you should bear in mind that some of your savings will need to be kept for when you move, as your outgoings will increase dramatically- so don’t leave yourself short.
Tip #7- Making Extra Money:
Increasing your income is a great way to increase the savings you have for your deposit. If you have the time, getting a second job or making money from an online business such as an Etsy account is a great way to earn extra income. Additionally, you could consider selling old items that you don’t need anymore- such as video games.
Tip #8- Consider a Budgeting/Saving App:
The world of technology is at your service in terms of saving. Apps such as Monzo and Oval can help you save up and deposit your cash into a different account. Alternatively, apps such as Plum, Chip and Cleo use an algorithm to test your financial behaviour and can decipher how much you can realistically spend.
Tip #9- Ask Your Family:
If your family are willing to help, borrowing money off them can massively help in saving for a deposit sooner than you would think. If this is something both parties agree to, then sit down to discuss questions such as how much they would lend you, how much you would pay back each month, and if they would charge interest.
Tip #10- Look at Your Potential Property:
Perhaps one avenue to explore is the potential of reevaluating the property that you’re interested in. If your desired property price is quite expensive, then the chances are your deposit requirements will be high too. Opting to buy a house in a cheaper area or reducing the size of property that you’re interested in may lower your deposit price and therefore help you save easier.