House Buying Tips: Saving For a Deposit
Are you thinking of buying a house but you’re not sure if you have enough deposit to secure a mortgage? Unless you already have a big savings or have family that can help you financially, you will need to come up with a plan to save for a deposit before you begin searching for a home to buy.
Saving for a deposit can be a challenge to some, especially first-time buyers. So here are a few tips to help buyers save for a deposit.
Find out how much you need
Firstly, you’d want to figure out how much you can afford so you can calculate the deposit amount you’d need to secure a mortgage. The minimum deposit require is usually 5% however, the bigger the deposit, the better deals you can get. So, if you have the means to save more, aim for 10-20%. Begin by looking at your spendings, set a savings goal for yourself with a reasonable timeline and begin saving.
Cut down unnecessary costs
Find out what you’re spending your money on and cut down unnecessary costs wherever possible. For example, if you eat out more than a few times a week or buy coffee every day, you may want to consider cooking at home instead or making your own cup of coffee at home so you can use the extra savings towards your deposit.
Start saving
Once you’ve set a goal for how much you need to save, it’s time to take action. You can open a regular savings account and setup a standing order so money can automatically get transferred to your savings account each time you get paid. If you’re a first-time buyer, you can also benefit from opening a Lifetime Individual Savings Account (ISA). The government will add a 25% bonus to your savings in an ISA and you can use the money towards your first purchase. There are rules associated with Lifetime ISAs, so be sure to speak with a financial advisor and understand how it works.
Ask for help
You can get a head start by asking family or friends to help with your deposit. If they are unable to help you financially, they may be able to help you with temporary accommodation instead. If you are able to move back in with family or share a flat with friends, you can save a lot on rent and use that money instead towards your deposit. There’s no shame in asking and this could help you save for your deposit a lot quicker.
Bottom Line
If you are serious about buying a house, you will need to come up with a proper plan and set a budget in order to save a deposit. Speak with a mortgage broker and find out how much you can afford before you begin. Cut down expenses and pay down any debt you have on credit cards or cars loans and student debts. Speak with a financial advisor and choose a saving account that best suits you and your needs. You can earn some interest on long-term savings account or setup a Lifetime ISA to use towards your deposit. You may also want to consider freelance work or pick up a second job and save all of your earnings. Lastly, you can downsize or move in with family or friends to save on rent.
If you’ve been saving already and have enough money for your deposit you can apply for a Mortgage in Principle and contact Lavelle Estates today to begin your house search. Lavelle Estates have estate agents in Liverpool that can assist you with your search. You can also browse our latest homes here.
