How Can I Save for a Mortgage Deposit?
When you want to buy a home for the first time, you will normally eb expected to save for a deposit if you want to borrow the money to buy the house with a mortgage. There are two reasons for this – the lender will want to see that you are capable of saving as that will give them faith that you will repay the mortgage but it will also mean that they do not have to buy all of the house and so if you miss repayments and they sell it, it is more likely that they will get back enough money to cover their share even if house prices have gone down or if their selling costs are very high. The amount that you need to put together will normally be a percentage of the cost of the house and that will be determined by the lender. Therefore, you will need to find out what this will be and then you will know what to aim for with your saving. But how can you save?
Set up an Account
The first step is to set up an account where you will put the money that you are saving up. It is a good idea to search around a bit to try to find an account that offers a good interest rate. This is because you will find that you will gain interest this way and you will not even have to do anything yourself! Even if interest rates are really low, finding one that is a bit higher can make a difference, particularly as your savings grow.
Pay in Regularly
Once you have your account you need to start paying in regularly. The best thing to do is to set up an automatic transfer that will put some money into the savings account when you get paid. Doing it at this time means that you will know that the money will be available to pay in. However, it is a good idea to think about how much you should pay in. If you have an instant access savings account, then it could be a good idea to make this figure on the large side as you can always withdraw money if you need extra, but if it is not in your bank account to spend, the you will not be tempted to spend it. If you have a cheaper month and have money left at the end of the month put that money in as well. It can also be good to see if you can think of some ways to get more money available to put into the savings account so that you can reach your target more quickly.
Cut Back on Spending
One way to have more money available to save is to spend less. This can be achieved in two ways. You can compare prices on everything you buy and then switch to buying cheaper items. You can also cut down in the amount of things that you are buying and that will enable you to have more money. You could choose to do just one of these, but both will have more impact. You could make huge changes right away or make changes slowly so that it is easier. It will really depend on how quickly you want to have the deposit ready.
Look for Ways to Earn More
It can also be handy to look for ways to earn a bit more. So, anything from doing more hours at work, taking on a second job, monetising your hobby or selling things you no longer need, there are lots of options you could consider which could help you to get the money more quickly.