For first time buyers, the prospect of saving a deposit for a first home can seem impossible. In the last few years, house prices have risen meaning that buyers need to raise thousands of pounds in order to secure a mortgage. For many people, this dream seems unreachable and young couples often make the decision to continue renting rather than spend years scrimping and saving for a mortgage. But, what if it wasn’t as impossible as it looks?
Make a plan
The first step in reaching any goal is to make a plan. Take a look at some of the houses you’re interested in and find out what kind of deposit they require. It’s also worth looking into the amount of deposit you’ll need to secure a mortgage. You can use as little as 5% to get a mortgage but it may mean you have to pay increased interest rates, so it’s better to aim for at least 10% if possible. This will give you an idea of how much you need save. The figure you come up with may seem impossible, but it’s important to consider your options before giving up entirely.
When it comes to raising a deposit for a mortgage, you may not have to do it all by yourself. After all, banks want your business, so it’s in their interest to provide you with as much help as possible. Help for first time home buyers can come in many forms. You may want to consider applying for a help to buy scheme, where a 20% deposit is put down for you. However, you do have to keep in mind that the deposit is repayable, and you may also have to pay interest if your home is sold for a greater price in the future.
Get paid to save
Saving money in your regular current account is just heading for failure. Unless you’re ridiculously strict on what you spend, it’s likely you’ll dip into your savings every now and then if you’ve got easy access to them. Putting your savings in a separate account is much safer. Take a look at the savings accounts that will give you the best return. You may have to deposit a minimum amount every month and you may not be able to make any withdrawals for certain period, but the amount you gain will be worth it.
An understanding family member
If you’ve got a family member with a bit of extra cash floating around and they’re willing to give it to you as a deposit that you eventually pay back, you’re in luck! However, many people haven’t got that amount to give but it doesn’t mean they can’t help. Take a look at the new 0% deposit mortgage offered by the Post Office. They will give you 90% of the house value and secure the other 10% by placing it against a family members home. The downside is, if you fail to repay your mortgage on time, both you and your family member are in trouble.
Difficult, yes. Impossible, no.