Saving for a Mortgage Deposit

You've got your heart set on owning your dream home, but saving for a deposit can seem a daunting task. This guide looks at the lifestyle decisions you can make to maximise your savings.

Work out your budget

Most mortgages require a deposit of at least 5% of a property's value, though recently many first-time buyers typically use a 20% deposit to buy a house*. It can help to use a budget planner to understand what you can afford and how much you can save every month. The more money you put upfront, the less you'll have to borrow. And you're more likely to then benefit from a lower rate of interest when it comes to securing your mortgage.

Think about paying off your credit cards and debts

Before you begin to save, it makes sense to focus on paying off any high-interest credit cards and debts. Once you've paid off those debts, you'll find you have more money available each month to put straight into your savings account.

Open a savings account

The key to building your deposit is opening a savings account and getting into the habit of putting away whatever you can afford on a regular basis. Consider whether you need instant access to your funds or if you can afford to have restricted access to your money with a fixed-term account.

Calculate how much you will need to save each month

Working out how much you need to save each month to reach your target is key. Transfer a realistic sum of money into your savings account each month via a standing order, and over time you'll learn to budget with the amount you have left in your current account.

Consider switching energy and mobile phone providers

Are you getting the best value for money with your current mobile, internet or energy plan? A few hours shopping around and visiting market comparison websites could help you reduce your monthly outgoings and increase the amount you're able to save each month.

If your mobile contract is up for renewal, consider keeping your old handset and opting for a cheaper sim-only deal. Many network providers incorporate the cost of your handset in your monthly bill so it might make sense to buy a new phone outright.

If you'd like some more help planning for your purchase, you can speak to one of our experienced Mortgage Advisors.

*Source - Which? Mortgage Advisors