Saving for a mortgage deposit
If you’re buying a home and applying for a mortgage, you’ll need a deposit. This is a proportion of the overall property price that you pay upfront. Generally, the larger your deposit, the better a deal you might get for the mortgage loan on the remainder of your home payment.
With this in mind, there are a number of ways in which you may be able to save for a mortgage deposit. These include the following.
- Help from family
If possible, you may be able to rely on family – for example, parents – for cash, informal loans, or as guarantors on your mortgage.
- Saving on rent
If possible, consider moving in with family in order to save on rent. Even if you’re still paying rent under the market value, you’d still be able to save more than if you rented outright at market prices.
- A joint mortgage
A joint mortgage is in the names of two of more people. You may also want to consider buying a home together with friends or family, in order to split the costs.
- Government schemes
See if you qualify for Government schemes designed to help homebuyers. These could include a Help to Buy: ISA, Help to Buy: Shared Ownership, a Help to Buy equity loan – or a London Help to Buy, if you’ll be living on the area.
- Cutting back on non-essential expenses
Trimming down on potentially large expenses related to leisure – for example, holidays and socialising – can help you to save money for a mortgage. We have plenty of tips on how to save money.
- Cancelling subscriptions
Having a subscription means having to make regular payments for something, even when you may not need it. Research alternatives to regular payments you have to make. For example, you may find it cheaper to run in the park than pay for gym membership.
- Shopping smarter
Consider cheaper alternatives when shopping. For example, you may be able to save on groceries by buying cheaper brands. Little changes like these can contribute towards your savings when accumulated over time.
Planning and saving in advance for a deposit is a step towards owning your home. Something else you may want to look at in advance is your credit history and score. Your Equifax Credit Report & Score – which is free for the first 30 days then £7.95 monthly – allows you to view your credit report, providing you with the opportunity to try to make changes to improve it if needed. It also calculates your Equifax Credit Score, which gives you an indication of how lenders may view your creditworthiness.
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