Getting on the first rung of the property ladder has become something of a pipe dream for many young people. First-time buyer mortgages are notoriously tricky to get, and can be very expensive. Despite the doom and gloom though, independent financial advice website Unbiased.co.uk reported that 40 percent of it’s searches for mortgage advice last month were from first-time buyers.
So if you’re one of those on the lookout, how can you scrape together enough of a deposit to give yourself the best chance of success?
How much do you need?
The unnerving prospect of saving 20 percent of the value of the property you want is unfortunately a realistic one.
20 percent will give you the best chance of successfully applying for a mortgage, and if the house you have your eye on is say, £200,000 – that’s £40,000 you’re going to need. I know, that’s an incredibly large amount of money – but you can save it, if you really put your mind to it.
How to start saving
If you’re really serious about buying a home, you’ll know you need to make a few sacrifices in order to save. So every spare penny you have should go straight to your deposit pot. Set up a regular savings account and pay a chunk of your wages into it every month by direct debit – that way you can’t forget and you won’t be tempted to spend it instead.
The best rate right now is with West Brom BS who offer 4.1% fixed for a year, and you can pay anything from £10 to £250 in each month. If you save the maximum each month you’ll have £3,000 at the end of the year, plus just over £120 in interest.
As well as a regular saver, open an instant access savings account too. Test your will power to the extreme by using that as somewhere to put any unexpected extra cash, but DON’T make withdrawals! At the end of each month, be sure to transfer whatever you have spare to this account.
As well as this, check through all your bills at home – energy especially. Take the time to use comparison sites and find out if you could get a better deal from another provider; just switching to a new energy supplier could save you about £500 a year. But compare your home insurance, broadband and phone too. And if you want to be really ruthless, see what you can cut. Do you really need to spend money on a TV package? Could you manage without your car?
Another way to pull together more cash is to have a clear out of all your junk. It’ll do you a favour for when you move, and you could get more for it than you think. Advertise online using sites like eBay or Preloved and make as much as you can. Remember all the cash you make from this should go straight to that instant access account.
Every little helps
Every time you refrain from any non-essential spending – a new pair of shoes, a coffee before work, a few drinks after work – tot up how much it would have cost you and stick it straight in your savings account.
At the end of each week, empty all the coins from your purse or wallet and put them in a money box. OK, it’s not going to be a fortune but if you stick at it you’ll be surprised how fast it adds up.
Even if your salary is modest, sticking to all of these tips with real determination could see you saving about £8000 in a year, which means you’ll have a substantial deposit in five years. Go on, you can do it!
Any questions or comments? Have your say in the comment section below.
Based in Edinburgh, Scotland Midas Property Consultants is a creative sales and marketing services company focused on serving the New Homes Industry, Estate Agents, Property Developers and private homeowners. We offer high level strategic consulting based on years of experience. We build marketing campaigns, showhomes, marketing suites, homestaging, and all the marketing tools you require to sell your properties.
If you would like to talk to us about your sales and marketing needs, then we would love to listen.
Repost from Wallet Pop