How can I save Enough for a Mortgage Deposit?
When we want to buy a home most of us will be looking for a mortgage. This will allow us to borrow the money that we need in order to own the house. However, most mortgages require a deposit. The deposit is normally a percentage of the cost of the house. The lender will want this not only to protect them against house price falls in the event of the repossessing and having to resell, so they know there are more likely to get all of their money back but to show that you are capable of saving money. There is also a big advantage to the borrowers as well, in that they will not have to borrow so much and therefore the loan will not be so expensive. However, having to save up so much money can be a real challenge and can even put some people off buying a property. There are many people that manage to do it though and so it could be possible for anyone. You may have to change your spending habits though.
– Save first – what this means is that when you get paid, put some money into a savings account first. This locks the money away and will mean that you are less likely to spend it as you will not see it in your current account. You will obviously need to carefully calculate how much money this might be, as you will need to leave enough to cover your bills for the month. It can therefore be worth looking through bank statements and seeing what you normally spend and therefore how much you can afford. It can also be wise to put any money left at the end of the month into the account as well. However, it can be tempting to wait until the end of the month before putting anything in your current account. This can mean that you will end up saving more as during the month you will check the current account to see how much money you have and if there is money there you will be more likely to spend it and less likely to budget.
– Compare all prices – when you are buying anything then it is wise to compare prices. IT is not always wise to buy the cheapest things as they may not give you value for money. However, many of us shop without noticing how much things cost and this is not wise if you want to save up a lump sum. Also, if you have long term agreements be it with existing lenders or even through guarantors, such as contracts for phones and broadband or deals with utility suppliers then make sure that you are not paying more than necessary. It can be wise to compare prices and swap, unless you are in a contract and then wait until it ends. This can help you to save money easily without really noticing any difference in the service that you are getting.
– Reduce spending on luxuries – these days we all spend a lot of money on luxury items. This is anything that does not just do the basics and so we have phones, tv’s, alcohol, go out, have holidays and all sorts of things which we could go without. Obviously, these things do add value to our lives, but if we are saving up for something then we may need to consider whether we can go without some or all of them in order to help us to save more. It is worth remembering that we will only go without them for a short time while we are saving hard. Although we may also have to make sacrifices in order to cover the cost of the mortgage repayments plus any maintenance on the house.
– Work more hours – it might be possible that you could work some more hours and earn more money that you will be able to put towards the deposit. This will obviously depend on the type of work that you do and what other commitments you have. It may be that you will have to take on an extra job in order to earn more, which could be possible for some people.
– Sell things you do not need – it is wise to have a clear out every so often anyway so that we do not get surrounded with clutter that we do not need. If you are doing this then you could try to sell some of the items and put the money towards your deposit. You may be able to sell locally or online.
– Downsize – it might be wise to think about whether where you are currently living is too expensive. If you move to a smaller rental property then you will pay less not only in rent, but also to keep it warm and possibly in council tax. This could help you to save extra money. Some people even consider moving back in with their parents so that they can avoid paying rent altogether.