How Am I Meant To Save For A Mortgage Deposit?

Many people view home ownership as a significant life milestone, and many associate it with stability or the beginning of a family. 

Although reaching this milestone is something to celebrate, there is still a price to pay: a mortgage deposit.

Saving for a mortgage deposit is quite hard; it takes years of saving and to an extent, letting go of the luxury life that you are living or might wanna live, but for some of you, it may not be possible for a few years to till the mortgage is paid off.

What Is A Mortgage Deposit?

A mortgage deposit, which normally varies between 5% and 15% of the home’s total value, is the sum of money you must pay up front when purchasing a home. 

Based on the percentage of the value you pay upfront, you can also get the loan for the rest of the payment at favourable rates.

In the current economy, managing savings for the mortgage deposit is the first challenge that everyone faces. With property prices rising and the cost of living squeezing wages, saving for a mortgage deposit feels out of reach for many. 

While some ethical low credit score loans can be a great option if you’re only short a few hundred pounds, it’s crucial to make sure you only borrow what you can afford and repay it on time. 

When day-to-day expenses already feel overwhelming, it certainly becomes difficult to save an approximate of £10,000, which is around what you need for your first home. Still, there are ways you can start. 

Even if you start taking some tiny steps today, you’ll be able to be in a position to have some savings that will help you pay the mortgage deposit. If you’re wondering what those steps are, we have a guide for you.

How To Save For A Mortgage Deposit? 

It can be difficult to understand whether you want to save up for your mortgage deposit, and also whether you can afford it as well. So here are a few ways you can start with your savings for your mortgage. 

1. Be Honest About What And When You Can Save

Setting goals like saving £500 a month simply isn’t realistic for most people. Instead, start by calculating how much money you have left after covering all your expenses, even if it’s just a single pound. 

Whatever the amount, transfer it into a separate savings account. Some months you may be able to save more, while in others, even putting aside a pound might not be possible, and both situations are completely fine.

The key is to begin saving in a way that works for your circumstances. Building the habit itself matters most, because once you establish it, you’ll naturally shift into a mindset that helps you find new ways to save more each month.

2. Lower Your Expenses Without Ruining Your Life

Once you have saved all that you can, the next logical step is to cut down on your spending. However, this doesn’t mean you simply spend less. There are other ways to look at reducing expenses than just cutting down. 

For example, instead of cancelling your internet altogether, could you switch to a broadband provider with lower rates? If you don’t work from home, you might even manage with a lower bandwidth. 

If you own items you rarely use, consider selling them. And if you buy a large coffee every day, switching to a regular size could save a noticeable amount over time.

You don’t need to give everything up. The goal is to cut back strategically so you can stay on track toward your mortgage deposit.

3. Explore Government Schemes

If you’re a first-time buyer, the government provides several programmes to help you. The Shared Ownership scheme allows you to buy part of a property while renting the rest, meaning your deposit only needs to cover the share you purchase. 

The First Homes scheme offers discounts on new-build properties for key workers and local residents. There’s also the Lifetime ISA, where the government adds a 25% bonus to your savings, which comes up to £1,000 a year. 

That said, it’s important to check your eligibility, as applying for these schemes can involve a significant amount of paperwork.

4. Make Your Savings Work Harder

When you stash your savings in your regular account, it becomes easy to borrow from it. You could try opening a separate account just for your deposit. 

Some banks let you round up all your purchases to the nearest pound and put the spare change into your savings account. You could also look into a fixed-term savings account or an ISA because they could offer you higher interest than a standard savings account. 

5. If You’re Not Saving Alone, Talk About It

If you’re planning to buy a home with your partner or a family member, it helps to be more transparent. You need to discuss how much each of you is saving and what a realistic timeline looks like.

Two people saving together can certainly help reach your goal a little quicker. You might be surprised; a family member might also offer to help with part of the deposit. This can only happen when you’re honest about your goals and where you’re standing currently.

Your Timeline Doesn’t Have To Match Everyone Else’s

Maybe someone you know bought their first home at 28, or maybe someone inherited the deposit money. 

These are their journeys, and yours might be a little different and might involve more effort. Saving for a mortgage is difficult, and even more so if you’re doing it from a place of low income or recovering from debt. 

However, the journey is worth the reward at the end. If you’re not ready to buy the house yet, it means you’re on the way. 

Read Also:

• From Debt To Wealth: Strategies For Paying Off Your Mortgage Faster And Building Equity
• The Benefits of Combining Personal Loans and Mortgage Loans for Financial Flexibility
• Leveraging Technology In Mortgage Financing