A mortgage deposit can be one of life’s more expensive endeavours, and saving for it efficiently is vital to ensure you don’t waste your time – or money
Saving money: we love it and hate it, and it’s one of the most efficient things you can do in life. 55% of us in the UK have something between £1 and £50,000 in savings, whereas 12% of us have more than £50,000 stashed away. What’s notably significant, however, is that 19% of us have no savings at all and are likely in debt too, a statistic which substantiates only too well that it’s much easier giving away your money, than it is saving it.
Weddings, holidays, cars, supporting a family – all of these aspects of life are not inexpensive. Saving up for a mortgage deposit can be one of the big ones too, so here is our guide as to how best you can do that.
Once you’ve decided to start saving towards a mortgage deposit, the first thing you’ll likely need to do is sit down, either by yourself or with whomever you’re planning on moving in with, and begin calculating what – realistically – you will be able to save each month. Look at your income, and put it against your outgoings. Cutting back on areas you were perhaps previously taking for granted, such as your weekly food bill, as well as gas and electricity usage, can be extremely effective in allowing you to put away even more at the end of the month. Allow for other costs during the month too, such as date nights with your partner, car repairs, unexpected trips that may need to be made, and any other miscellaneous things, so that you make that saving plan all the more realistic and accurate. Cut down where you can, and make it an ongoing thing – later on in life you’ll be glad you did. Remember, it’s never too early to start saving!
Make a savings plan
With your buying cost price-range for the property in mind, put against what you’ll be able to save over a yearly period: you will then be able to judge how long it will take before you’re ready to place your deposit.
On the whole, irregular, random, inconsistent payments into a savings account can be ineffective, and compared to a regular savings plan, can quite frankly be inadequate. Besides, after having calculated exactly what you are able to save each month, there’s no reason why a regular monthly payment is not something you’re capable of doing. You can set up a standing order with your bank so that money can be transferred into a separate savings account regularly and automatically, without you having to do anything each month.
The type of interest rate you will benefit from will vary from one savings account to the next. Many savings accounts often boast attractive headline rates of interest, making sure you’re adding to your savings nicely each month. Sometimes, however, there may be restrictions, such as the limits on the number of withdrawals you can make each year. Furthermore, you may receive less interest if you miss a month of savings, and you may need to have a current account with the bank already.
Help to Buy ISA or a lifetime ISA?
An ISA (Individual Savings Account) is a tax-free way to save or invest. If you’re starting to think about saving or investing, ISAs could be a good place to begin. Each of these products offer a 25% bonus on your savings when you buy a property, but there are some contrasting conditions regarding this, and differences in general.
You can open a Help to Buy ISA at the age of 16, whereas a lifetime ISA has to be at 18. For the Help to Buy ISA, an initial deposit of up to £1,000 can be paid into it to open the account, and then you can pay up to £200 each month afterwards. For a lifetime ISA, there are no monthly deposit limits, and you can save up to £4,000 a year in total, meaning you can get a much bigger bonus than the one offered by a Help to Buy ISA.
The lifetime ISA bonus is available on properties worth up to £450,000 anywhere in the UK. For the Help to Buy ISA, the government will add a £50 bonus for every £200 saved in the account, up to savings of £12,000, meaning savers could benefit from a maximum bonus of £3,000. This bonus is available on properties worth up to £250,000, or £450,000 in London. For the lifetime ISA, you can’t withdraw your savings (and bonus) within the first year.
Connect with us
View by date
With the property market having been reopened for just over a month, new trends are starting to emerge… The latest stats from Rightmove have revealed new property trends for Brits as we start to move out of lockdown. The pandemic has made potential buyers rethink their priorities when it comes to a property with an …Read more...
Due to the Coronavirus lockdown, many highly anticipated films have been pushed back, but with cinemas due to reopen this week, we thought we’d look at the latest release dates for some of the biggest blockbusters this year… Mulan – 12th August Disney continues to rollout live-action remakes of their classics. This time around …Read more...
Liven up your summer with these refreshing ice cream recipes. Something for the kids to get involved in! Sugar-free strawberry and banana ice cream Serves 8 Ingredients: 300ml double cream 300ml whole milk 6 large egg yolks 1 vanilla pod, cut in half lengthways, seeds scraped out (or 2 teaspoons of vanilla bean paste) 500g …Read more...
Yesterday, the Prime Minister, Boris Johnson, in a statement to the House confirmed that lockdown measures will be further reduced from the 4th of July onwards… The government released plans to return life to normal for as many people as possible, in a way that is safe and continues to protect the NHS. The …Read more...
With some companies seeing the benefit of homeworking moving forward, a high number of people will be regularly working from home, so it’s important to get the environment just right for doing so… Choose the right space But what should you consider when converting a room into a home office? Choosing the right space …Read more...