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!
The minimum amount needed for a mortgage deposit 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!
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.
If you’re serious about saving for a mortgage deposit, 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!
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.
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.