Last Updated on November 30, 2020 by Melissa S.
A house is likely to be the biggest investment that anyone makes in their lifetime. So, if you’re planning on doing it, it’s best to do it properly. Renting is fine. It gives you the freedom to easily move between properties, so is ideal if you’re not sure exactly where you want to settle down yet. But once you’ve decided on a place to stay, it’s time to start looking at buying. When you rent, you’re essentially paying your landlord’s mortgage on their behalf or providing them with an income. When you buy, you’re putting the money you earn into something that you can keep and benefit from. Now, a huge part of buying a house is saving your mortgage deposit. This will take financial planning and determination. Seeing as the average deposit is between 10 and 15% of a property’s overall value, it may take a while to save. But in the end, it will be worth it. Here are a few different things you may need to do to achieve your goals.
Clear Any Outstanding Debt First
Before you start saving for your deposit, you first need to clear any outstanding debt you may have. There’s no point having savings in the bank when this money could be used to clear debts which are likely to have interest growing on them. Whether that’s Payday loans, credit cards or other forms of borrowing you’ve engaged with, start chipping away at the sums and you’ll soon find yourself debt free and ready to save.
Use a Mortgage Calculator
If you’re considering buying a house, you need to make sure that you know exactly what value house you can buy. Then you can figure out how much of a deposit you need to save. Knowing what money you have to put away will give you a better idea of how long it will take you to save for a deposit on a mortgage that you’re likely to be approved for. The easiest way to determine how large a loan you would be accepted for (and consequently what kind of deposit you’re going to need to save), you should make use of a mortgage calculator. These allow you to input the price of the mortgage you’re interested in, the interest rate attached, and the loan term in years. You will then be given a summary of the amount you would be expected to repay monthly. If this is too month, you can reduce the mortgage size and try again until you find a mortgage you can afford. Then figure out roughly 10% of this amount to know how much you need to save in total.
Now, you can start saving. Attribute a proportion of your disposable income into a savings account each month. Find the highest interest rate savings account possible to save quickly – generally speaking, LISAs are a good bet!
These simple steps are the first that you will take towards getting onto the property ladder. Make sure to keep them in mind and you’ll secure yourself a house before you know it!