There are a number of costs associated with saving to buy a house, with the biggest cost being the mortgage deposit. Helen Robinson, Sales Manager at Strata advises first-time buyers to save at least 5% of the property value that they are aiming to buy. “If you’re using schemes available such as Help to Buy or part-buy part-rent, then you only need a 5% deposit. Without using these schemes, you would need to save at least 10% deposit to secure a mortgage.”
How easy is it to save for a house while renting?
While it may feel like an uphill struggle, saving while renting can be much easier than you think. “We often find people come to look around the show homes with the idea that it will take them forever to save for a new home. They are often surprised by how affordable buying can be, and saving for a mortgage while renting is more achievable than they first thought,” says Helen.
With schemes such as Home Reach
part-buy part-rent and Help to Buy
allowing first time buyers to buy their new home with just 5% deposit, renters can get on the property ladder much sooner.
Top tips on how to save for a mortgage
One of the first steps when saving for a mortgage is to understand the buying costs
and get an idea of how much you are going to need to buy the home you want.
With that in mind, we’ve gathered our tips on saving for a mortgage:
- Set a savings target: How much do you need to save and when ideally do you want to be buying your new home? If you want to move in three years’ time, and you want to buy a £200,000 home, you’ll need to save £227 per month to save a 5% deposit and £555 per month to save a 10% deposit.
- Open a Help to Buy ISA: you can save up to £200 per month in a Help to Buy ISA and receive a government-funded bonus of 25% on a maximum of £12,000 savings. And if you’re buying with another first-time buyer, they can open their own Help to Buy ISA and claim the bonus too!
- Reduce your monthly outgoings: You could be spending more than you need on your monthly bills. Shop around for better deals on your monthly bills such as mobile phone contracts, TV, broadband, car insurance and more.
- Set yourself spending limits: While going out for a meal or enjoying a takeaway every so often is great, these costs can soon add up. Set yourself a ‘leisure’ budget for the month so that you can still enjoy treats while saving for a house.
- Ask for a helping hand: It’s common for first-time buyers to get support from family to get on the property ladder sooner. A survey from the Council of Mortgage Lenders shows 80% of people under 30s ask for help from their parents when saving for a house deposit.
By making some simple changes to boost your savings, buying your first home is much more achievable. If you’d like to find out more about the schemes available, join us for a chat at your nearest development