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It is more difficult than ever to secure a mortgage for a property, partly because of strict lending criteria and the demand by mortgage lenders for larger deposits. As a result of this, many people are choosing not to buy a home or are delaying getting a foot on the property ladder while they attempt to save for a deposit. The larger the deposit you have, the more chance you have of being offered a mortgage by your bank, especially if you have any previous debt or a less than excellent credit rating. It’s a good idea to begin saving as soon as possible, and consider investing your savings to create a good return or use a high interest savings account. First however, you will need to get an idea of how much you need to save, based on what you can afford and how much a lender is likely to offer you based on your income.
Remember it takes time to save, you will need to make sacrifices if you are serious about saving for a deposit and stick to a budget. This is also a good opportunity to evaluate your income and expenditure and identify where you can make savings. This could be in unnecessary subscriptions or eating out. These savings could be all you need to begin seeing your savings grow. You can also assess your energy bills or mobile and internet provider and see if you can negotiate a better deal or go elsewhere. This way you can in fact save hundreds of pounds per year just by switching to another company.
You can start by being savvy with your money, for example use your ISA to its maximum to take advantage of tax-free savings, and scour the market for the best deals on interest rates. It’s also a good idea to speak to your existing bank as they may be able to offer you a better deal, particularly if you are a long-term customer. Investments can potentially offer a good return but there is a high risk attached to investment vehicles as you could end up losing everything you have saved, so it’s important to bear that in mind as tempting as it may be.
For many people, it’s a catch-22 situation as they struggle to save for a deposit while they continue to rent from a landlord. Not only is it difficult to save but you have very little security and he could well choose to sell property quickly leaving you in a very difficult situation. However if it possible for you to arrange to live rent free for six months, you could save that rent money towards your deposit. This, along with budgeting carefully on other things can make a significant difference to the amount you could save over a shorter period of time. You could see about moving in with your parents temporarily, perhaps friends or if that isn’t possible you could consider shared accommodation which is significantly cheaper, and your bills are usually included within the rent making it a better option.
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