A mortgage deposit is the largest amount of money most people will ever save. It’s a big milestone to reach. But, if you think smart and make a few small adjustments to your current spending habits, the pounds will soon pile up and you’ll be in your new home in no time!
How much deposit will I need?
The minimum deposit for a mortgage is 5%. However, the more you can save, the more favourable your mortgage rate will be. A 10% deposit would put you in a far stronger position and should be achievable if you are saving to buy a home with someone else – don’t forget to also budget for your moving costs; Stamp Duty Land Tax, valuation and legal fees!
Review your finances
Once you know how much you need to save, a thorough review of your finances could make all the difference. Make a simple list of all your outgoings including your; rent, insurance policies, energy bills, television, broadband, landline and mobile phone contract/s, and how much you are paying for them each month, and compare it with your monthly income, including your current earnings and any regular overtime payments and bonuses – this will give you a solid foundation to work from.
Clean up your act!
If you’re serious about saving for a mortgage, then cutting back on some little luxuries, such as your daily coffee or weekly takeaway, will free up some additional finances for your home fund. Lenders will also look at your credit history and spending habits when you apply for a mortgage, so an orderly bank statement could benefit your application!
Boost your savings!
Cash ISAs and savings accounts are two great ways to make your money grow faster. To make sure you stick to your plan, consider setting up a standing order or direct debit, so that your savings are automatically paid into your account every month.
- ISAs Allow you to save money tax free, up to the annual allowance of £15,240.
- Fixed bonds By depositing a sum of cash for a set period of time, you can secure a fixed interest rate. However, you won’t be able to access your cash until after the agreed time.
- Savings accounts Tend to offer slightly higher interest rates than current accounts. But, you usually need to pay in a certain amount each month to benefit from the interest.
Free, specialist advice & support
When you are nearing your savings target, it’s a good idea to obtain an Agreement in Principle, which we can obtain for you at no charge!
Alternatively, if you would just like some free advice about your affordability options, our expert mortgage advisors are available 7 days a week to meet or chat with you to help you get your dream home.
Are you considering taking out a payday loan? Take our advice and consider all the available options first. Payday loans may seem like a quick fix to a short term problem. But, they can seriously jeopardise your credit score, and risk your chances of being approved for future credit, especially a mortgage!
6 years bad luck?
Payday loans can significantly reduce your ability to get a mortgage, even if paid on time. Lenders use your credit report to check your repayment history, which contains records on bank accounts, credit cards, loans, overdrafts, mortgages, mobile phone/s and some utilities payments, from the past 6 years!
Payday loans are associated with financial instability, so if you are looking to buy a property and have had a payday loan within the past 12 months, you will not be able to get a mortgage. Similarly, if you had a payday loan a few years ago and only have a small deposit, your chances of getting a mortgage are restricted and will likely be at a far less favourable rate!
Are there alternatives?
If you need some extra cash, there are other options which can be far cheaper – so long as you can afford the repayments!
Most banks offer a 0% interest overdraft with their current accounts, allowing you to gain access to a reserve amount of cash. You can spend on your card and make withdrawals from a cashpoint, up to the limit the bank agrees with you.
Interest rates are at an all-time low, so it’s a good time to get a loan. However, you should only ever borrow what you need and repay it as quickly as possible – you won’t want to pay any more interest than is needed!
A credit card will enable you to spend on your card up to the agreed limit. This is fine, so long as you can afford to repay what you have borrowed at the end of each month, to avoid having to pay any interest.
Many credit cards now also offer 0% interest for 12 months+ on balance transfers, giving you plenty of time to repay the money you borrow! This could be a great option if you have a good credit score and are able to make the repayments. Bad credit? There are still options available, but the time you have to make the repayments may be shorter. However, you will likely have much longer than you would with a payday loan!
Watch out! Make sure you know how long the interest-free period is for and don’t go over the agreed limit – you won’t want to be hit with any additional charges. Remember to also never withdraw any sum of cash on your card, as you will pay a fee for this which could be hefty!
Credit unions and CDFIs
Credit unions and Community Development Finance Institutions (CDFI) aim to assist people who may not be able to get standard financial products and services available on the market. They offer loans that are similar to payday lenders with generally cheaper interest rates.
If you are interested in obtaining a copy of your credit report, you can do so by signing up with either Experian, Noddle or Equifax.
Moving in together is one of the most exciting things you’ll do, but it can be stressful if you do not plan ahead. However, we have compiled our top tips to ensure that you make the most of your experience. You only get to move into your first home once, so make sure you get organised and enjoy it – you’ve earned it!
Put together an essentials box filled with everything you’ll need for moving in day including; cleaning products, toilet roll, coffee, teabags, sugar and snacks for your helpers – don’t forget the kettle!
The essentials – It won’t be much fun without them!
One of the first things you’ll need to do is set up is your gas, electric and water. Make sure you arrange this as early as possible, as you will want to have everything up and running from day one.
You should also take a meter reading as soon as you move in to make sure your bills are correct, otherwise you could end up paying for the energy used by the previous occupants!
If either of you have owned a property before, you’ll also need to settle any outstanding balances. Just take a final meter reading before you move out and call your providers.
Tell your bank
The last thing you’ll want to deal with is a new card or PIN number being sent to the wrong address! If it was used for fraudulent purposes you would also not be covered by your bank, so advise them of your new address as soon as possible.
The easiest thing to do is to compose a standard letter, which we have put together for you here. Your bank statements are also a great place for noting any other companies you’ll need to inform.
Redirect your mail – it’s hard to remember everyone who has your address!
You can easily redirect your mail online via the Post Office. There may be a small cost for doing this, but it’s a small price to pay to avoid becoming a victim of fraud!
Update your online accounts
Ensure you add your new address to your online shopping accounts as soon as possible, otherwise someone else might benefit from your recent purchases!
Set up your television subscription (don’t forget your TV license!), broadband, landline and mobile phone contract in advance. You will often need to wait a few weeks to have these installed, so we recommend booking this work in as soon as you receive your moving in date.
Electoral roll – make sure you’re registered
Credit providers use the electoral roll to measure your eligibility for credit, so make sure you are firstly registered, and that your details are up to date!
Don’t forget your car
Your car insurance, V5C vehicle registration certificate and driving license all have to be updated – preferably before your move.
Be sure to also tell your insurer how your vehicle will be parked at night, as you may be able to save yourself some money! It could work the other way, but not notifying them in time could result in your claim being turned down, if you need to make one.
So the big day has been and gone and you’re now settling into your new life as a married couple. Now it might not be at the top of your priority list, but changing your name could affect your credit rating and there is quite a bit to think about. Luckily, we have come up with our top 5 things to do to avoid this.
1. Who should you inform?
Basically everyone. Some are more important than others, but we have compiled a handy checklist below for you to work from. The easiest thing to do is to compose a standard letter advising of your new name. We have put one together for you, which you can download here and send along with a photocopy of your marriage certificate. It’s worth noting that some companies like your bank, may request the original – I hope you’ve got a spare!
- Bank accounts
- Clubs, societies and associations
- Credit card, finance and loan companies
- Department of Work and Pensions (if you are entitled to any benefits)
- Driving license
- HM Land Registry (if you own land or property)
- HMRC for tax and NI records (obtain your reference and tax office address from your employer)
- Insurance (car, home etc.)
- Internet provider
- Local authority (council tax and electoral register)
- Magazine subscriptions
- Mail-order companies
- Mobile phone provider
- Pension providers
- Premium Bonds office
- Telephone provider
- TV license office
- Utility services (gas, electricity, water and sewage providers)
2. Buying your dream home
Buying your first property is one of the most exciting things you will do together, but you need to decide how you’ll own it? As ‘joint tenants’ you will both own the property and if anything were to happen to one of you, it will automatically go to the other. The other option is ‘tenants-in-common’, where you both have a fixed share in the property, but if one of you died, the other may not automatically receive it.
3. Joint insurance policies – could save you ££s!
Arranging insurance is something we all put off doing until we have to do. But, one of the many benefits of being married is that it is you can normally save money by adding your partner to your existing insurance policies! It’s not compulsory, but who doesn’t want extra cash in their back pocket?
4. Beneficiaries – check yours are right
It is likely that you will want to leave any assets you own to your partner in the event that something were to happen to you. But, if it’s your first marriage, it’s likely everything has been set up to go to your parents. Contact your banking, insurance and pension providers to make sure they have been set up accordingly!
5. Wills – gloomy, but important!
Writing a will is not something anyone ever wants to do, but once you’ve done it, that’s it until you have kids. It doesn’t have to be complicated, but it is recommended that you see an Attorney, who will arrange it for you and keep a copy on file.
Comparing mortgages online is a good starting place for a general understanding of the market. But, choosing a mortgage is far more complicated than just getting a low rate or the best incentives.
A professional mortgage advisor will provide a level of service that cannot be attained from a high street lender or comparison site. They take the time to access your personal needs and circumstances to ensure that you get the product that’s right for you. They can compare hundreds of mortgage quotes and access a number of products that are only available to mortgage advisors.
A mortgage is the biggest commitment most people will ever make. It is often a daunting process for a lot of people and can be risky if you do not seek professional, financial advice first. Lenders can tell you about their own products, but are often unable to advise you about other options available on the market, which may be more suited to your needs.
Mortgage advisors usually charge a small fee for their services. However, they have a duty of care to you. They have to recommend a suitable mortgage and be able to justify why a particular mortgage they have chosen is right for you. If you are not happy with their advice, you can complain and and if the complaint is upheld receive compensation.
A helping hand
Mortgage advisors help relieve the stress and hassle of the mortgage application procedure by arranging it for you. They are used to dealing with lenders and can process your application quickly, with many larger brokers also having direct access to the underwriters themselves. The benefit of this, is that they can discuss any potential complexities with a particular case from the very beginning. Preparing all the documentation and liaising with the lender, estate agent and solicitor to ensure deadlines are met, is a time consuming process and this is all part of the broker’s service to you.
Once your mortgage application has completed, you will receive a personalised aftercare service from your mortgage advisor. This is optional, but the benefit of this service is that they will let you know when your product is due for renewal, and provide you with some helpful advice if you find that your circumstances change.