Looking to buy your first home but struggling to save for a deposit? Get savvy with your money following our tips, and you’ll soon have enough to put down a deposit.
What is a mortgage deposit?
A mortgage deposit is a lump sum amount of money that you pay upfront when you’re buying a house. It will usually need to be at least 5% of the value of the property you’re buying. The bigger your deposit, the smaller the mortgage you’ll need to take out to pay for the rest of the house.
How do I save for a deposit?
With a few simple tips and tools, you’ll can save up enough to put down as a deposit, and maybe even sooner than you might think.
Cut your spending and make money
If you’re committed to buying your first home, ensure you’re doing everything you can to save as much as possible towards your deposit. It’s also beneficial, as cutting down on unnecessary spending shows lenders that you’re sensible with your money.
- Create a separate savings account – If you want to make sure you’re saving money and not spending it, then a separate savings account is a good place to start. Set up a savings account with your normal bank or use a price comparison site to find one with the best interest rate.
- Price comparison websites – As well as your savings account, use price comparison sites to help you save on your utility bills, car insurance, and even your weekly food shop.
- Use a saving or budgeting app – Saving is so much easier when you don’t have to do anything at all. Try downloading a saving/budgeting app like Plum or Yolt. These apps have features that round up your spending to the nearest pound and deposit the difference into a separate savings pot.
- Make one sacrifice - Cutting out one luxury can give your savings a big boost. It could be gym membership, a regular beauty treatment, meals out – whilst you’ve managed without these things during the lockdowns, ask yourself if you could forego them for longer whilst you save up your deposit, or at least cut back on the type of membership or regularity of treatment / meals out you have.
- Sell things you don’t need - There’s money to be made from second-hand goods, so don’t hang on to clothes, books, DVDs, and games you don’t need.
- Walk – Instead of taking the car, could you switch and use the bus, walk or even take a bike instead? Walking a bit extra each day can help you lose physical pounds and save money towards your deposit at the same time.
Make your savings work for you
In addition to saving up your money, it’s equally important to make sure you’re saving in the right places. Saving into a Lifetime ISA is a brilliant way to boost your savings when you’re buying your first home.
- You can put in up to £4,000 each year - until you’re 50 years old.
- The government will add a 25% bonus to your savings - up to a maximum of £1,000 per year.
- You can save lump sums - you don’t need to commit to saving each month.
Improve your credit score
When you apply for a mortgage, the mortgage lender will take a look at your credit rating to decide whether to lend to you, how much to lend you, and sometimes how much interest to charge you too.
Improving your credit score will increase your chances of having your mortgage application accepted.
Read our 8 simple ways to improve your credit score.
Speak to a mortgage adviser
Finally, if you want to buy your first home and have been busy saving, it’s time to talk to a mortgage adviser to get the right advice.
Our in-branch mortgage advisers have access to over 12,000 mortgages from over 90 different lenders. We even have access to exclusive offers and products that can’t be found with High Street lenders, so they’re always in a great position to find the right mortgage for you. Appointments are available within a few days of requesting and can be in-branch, over the phone or via video call to fit in with your day.
Book an appointment today.