5 Steps To Start Successfully Saving For A Mortgage
Saving for your first home can be incredibly daunting, but having a clear and realistic plan can certainly make it feel much more achievable. When my fiancé and I started saving for our first home earlier this year it seemed there was going to be a long, difficult road ahead before we could move into our first place…
However, only 8 months into the year and we’ve already managed to save a third of our deposit! Here are my 5 top tips for starting to successfully save for a mortgage deposit - fingers crossed these tips will get you well on the way to your dream home!
Image: precondo
1. DEVISE A SAVVY SAVING PLAN
Before you start saving for your first home it’s a good idea to do some market research. I don’t know about you, but I love looking through homes on RightMove, so this shouldn’t be too hard! Make sure you have a rough idea of the locations you want to live in, the type of house you are after and, most importantly, the average house price in this area.
Now you’ve got a rough idea of how much your dream home is going to set you back, it’s time to calculate how much you need to save for your deposit. Most mortgage providers ask for a deposit of around 10% to 20% of the house price, so for a £300,000 house you would need to have a deposit between £30,000 and £60,000 to qualify for a mortgage.
Don’t worry if this sounds totally unachievable, there are plenty of other options - check out this handy guide for more tips surrounding guarantor mortgages and shared ownership.
Hopefully you’ve now got a rough idea of how much money you need to save for that dream house to be yours. Now comes the tricky part, creating a budget. My best piece of advice for creating a budget is to be both realistic and consistent; find a sum that you can commit to putting aside each month for your budget and make sure you stick to it!
2. CONSIDER A MORTGAGE SAVING OR BUDGETING APP
To help you with budgeting for your deposit I really recommend investing in a savings or budgeting app. There are loads out there on the market (Monzo is a good example), which allows you to track your spending to help you to develop an accurate monthly budget whilst also rounding-up all of your spending to the nearest pound to add to your savings account without you needing to remember!
My favourite app for this has got to be Nude. Nude is a newly created financial friend for first-time home buyers which tracks your monthly expenditure to calculate how long it will take you to save for your first-home deposit. I have found this to be the most useful mortgage saving tool on the market and it’s totally free!
3. HOW COULD YOU SAVE MONEY?
It might be cliché but making small changes to your everyday spending really can add up when you are saving for a mortgage. Check your budgeting app to see where most of your expendable money really goes - perhaps you hadn’t realised that your daily coffee is costing you £700 a year (yes, this is from personal experience!) or that you still have a gym membership you don’t use!
My method was to brainstorm and create a huge mindmap of all the places I could possibly save money within my day-to-day spending. I think this is a really good place to start when looking at ways in which you could save money and one that I certainly recommend.
Always make sure you are on the lookout for great deals, I use the Money Saving Expert all of the time!
4. MAKE EXTRA MONEY
If you’ve gone through your budget with a fine toothed comb and still can’t find any ways in which you personally could save additional money then there is always the option of topping up your earnings with a side-hustle or online business.
There are countless ways you could do this, from freelancing to setting up your own Etsy shop! Everyone has something which others are willing to pay for, whether that is a skill or a commodity, so make the most of it and get yourself out there!
5. FIND YOUR IDEAL SAVINGS ACCOUNT
Now you’ve created your budget and started to brainstorm ideas to help you to save money day-to-day, the big question is, where do I put all of these savings? Well, there are many saving options out there, which one you choose really depends on your personal circumstances.
If you are looking for an easily accessible savings account, which you can access at any time, a basic ISA may be the best option for you. Basic ISA’s allow you to withdraw money at any time without a fee. However, there are other options out there that do give a great return on your savings.
I am currently using a Lifetime ISA to save for my mortgage. A LISA allows you to deposit up to £4000 per tax year into your account and the government will add a 25% bonus to this, basically giving you free money for saving! On the down side you must use the money to buy your first home or for retirement, so this account is a little limiting … but it is definitely worth it in my opinion!
So there we have it, my 5 top tips for saving for your mortgage deposit. What are you waiting for? It’s time to get saving!
Help us keep the City Girl Network running by supporting us via Patreon for the price of a cheap cup of coffee- just £2 a month. For £3 a month you can also get yourself a Patreon exclusive 10% off any of our ticketed events! You can also support us by following us on Instagram, and by joining our City Girl Network (city wide!) Facebook group.
Written by Josie Armstrong
