Whether house prices are falling, going up or remaining static, getting on the housing ladder is still a priority for some people.
There are plenty of mortgage solutions available – remember, at Continuum, we can help find the mortgage that is right for you – but before you can start thinking about a mortgage, you will need to start building up a deposit. The size of your deposit will make a huge difference to the mortgage deals you can find. The bigger your deposit, the lower interest rates can be – meaning you will have smaller repayments each month.
Plus, of course, the bigger your deposit, the smaller the loan you will need.
How much deposit will you need?
House prices vary enormously across the country. You can research house prices for the type of property you want in the area you want to by using websites such as Rightmove or Zoopla.
But wherever you are headed for your first property, you should allow for a deposit of at least 5% of your target purchase price. You may be better off with a larger deposit.
Remember the costs don’t end there. On top of your deposit you will have legal fees, stamp duty, and other extras that can soon mount up. You probably don’t want to walk into your new home and find you have no cash over for decorating and furniture or paying the bills.
If you can’t call on the bank of Mum and Dad, you will obviously need to save to build up your deposit.
Saving is difficult for everyone, especially if you have rent to pay. Even if you move back in with parents it will take time. Having to wait can be frustrating, particularly if house prices are steadily going up.
How much can you afford to save? Pay your bills. Work out what you need to get you through the week, and then save everything left over. Cutting your outgoings will mean you build up your savings faster. Also important is avoiding loans and HP arrangements. Lenders will check your monthly outgoings to ensure you have enough cash to live on after you’ve paid them.
So how do you get your savings growing?
You’ll be working hard to build those savings, so they need to work hard too. You might want to look at saving in an ISA, to stop the taxman helping himself to a slice of the interest you earn. In fact, if you choose a Lifetime ISA, with a Government Bonus of £1,000 or a Help to Buy ISA which has a maximum overall bonus of £3,000 and a savings limit per month up to £200 including the allowable £1,200 first month deposit, these could potentially help build your deposit faster.
A look at our Cash Management Calculator might help you find the best way to make your cash grow faster.
Get professional advice
As well as finding you a mortgage, at Continuum we can help you find the best ways to build the savings you need for a deposit.
Please give us a call today and speak to one of our professional team.
You home may be repossessed if you do not keep up repayments on your mortgage.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The Financial Conduct Authority does not regulate deposit accounts.