We have some tips to help you get there more quickly

For first-time buyers hoping to take that first step on the property ladder, saving for a deposit is often the most challenging part. Most lenders require a minimum of 5% with a lender covering the rest as a mortgage. 

The amount you need to save can feel overwhelming, however, there are ways of saving for a deposit in less time. Read on to find out more. 

Time spent planning is worth it in the long term. Work out how much you can afford and how much you can save, then set a budget and try and stick to it. Think about items you could do without for a few months and review your larger outgoings on comparison websites to see if you can find cheaper alternatives elsewhere. 

Your rent will take a significant amount of your income every month so think about ways of lowering this by sharing your flat with a friend or renting out a room (check with your Landlord first). You could even move in with a friend, move back with your mum and dad, move to a smaller place, or live in a shared house. 

Think carefully about where and how you shop and consider cheaper alternatives. It’s surprising how the pennies mount up. Talk to friends and family so they understand your financial goals and, if the plan is to go out, suggest cheaper alternatives, or use vouchers instead. 

It’s surprising what you can find to sell if you have a root through cupboards and drawers at home, some of which might be of value to someone else. You can then put this money towards your deposit. 

Make sure any money that you’re saving is going into an account that can work hard on your behalf. ISA’s can be an invaluable way of saving, allowing you to save up to £20,000 tax-free (2). If your savings plan runs into years, then locking away your savings for a year or two in a fixed-rate savings account would help to secure a better rate on your lump sum. 

You might be fortunate enough to have parents who can afford to pay the deposit for you in the form of a gift. If this is the case then great news, but it will need to be declared to your mortgage provider and solicitor. 

If this isn’t possible, an alternative could be a family springboard mortgage (3) which allows you to buy your own home with help from a family member or friend. It would be a 100% mortgage borrowing the full purchase price of your new home. Your loved one would need to provide a 10% security amount to the lender over five years that is held within a savings account. They would then receive their full money back with interest, providing the mortgage payments are met on time. 

If you’re 21 and over, currently renting and have a track record of monthly rental payments over six months with no missed payments on debts, then this type of mortgage might be an option for you. 

You won’t need to save up for a deposit, however, if you do have funds for a deposit amount that is less than 5% of the value of the home you’d like to buy, then this will be accepted. However, they do come with some drawbacks including stricter lending criteria and high interest rates. 

Our advisors can talk you through the pros and cons and discuss other options that might be better suited to your situation.

Make sure you have your ducks in a row

It’s all very well talking about saving but it’s worthwhile taking the time to consider aspects that lenders are going to be looking for when considering your eligibility for a mortgage, all of which help to strengthen your credit score.

  • Make sure you’re on the electoral roll

  • Pay more than the minimum payment on your credit cards

  • Minimise your overdraft

  • Have three months of bank statements ready

  • Ensure your address is correct on your driving licence

Let us help make your dream home a reality

We have plenty of great advice to help you on your journey to owning a home and are available at a time that suits you. 

Contact the team on 01565 874 246
Email: hello@malloryfinancial.co.uk 

Your home / property may be repossessed if you do not keep up with repayments on your mortgage. There may be a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £399 to £750 and this will be discussed and agreed with you at the earliest opportunity. 

Sources

    1. https://www.gov.uk/shared-ownership-scheme
    2. https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/first-time-buyer-mortgages/
    3. https://www.gov.uk/individual-savings-accounts
    4. https://www.barclays.co.uk/mortgages/family-springboard-mortgage/

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