Tips to help you save for a mortgage deposit

man saving coins in a jar

For many people, a deposit for a property purchase is likely to be the largest amount of money they will ever need to spend in one go. Mortgages today require a larger deposit than in years gone by and 100% mortgages are a thing of the past. You now need at least 5% deposit of the property value but it is advisable to try to put down 10% or even 20% to get access to the best mortgage deals and lower interest rates.

Speak with an expert mortgage adviser to find out about how much deposit you are likely to need.

To buy a house, most people have to save money over several years to save for the deposit and that often means making changes to their lifestyle and eliminating bad financial habits. Here are some tips and ideas to help with your savings plan.

1. Stop renting for 6-12 months

Renting is a large outgoing and with rental prices predicted to rise by 15% in the next 5 years, continuing to rent can mean there just isn’t any spare cash to save at the end of the month. Just 6-12 months without having to pay large rental costs could make all the difference. But are there alternatives? Alternative living arrangements could include returning home to live with family or finding a cheaper room in a shared property. Speak with friends who already own properties with spare bedrooms – you might find that they are looking for some extra income and would welcome you as a lodger for a short while.

Whichever alternative accommodation arrangements you make, just remember to discuss upfront with the family or friends you are staying with about rent, covering bills etc. There is of course, still likely to be a cost involved wherever you live, but it will be most likely be cheaper than renting your own place.

2. Sublet a room/get a lodger

If giving up your rented home isn’t an option and you have some spare space, then consider getting a lodger to subsidise your rental cost. You will need to check that your landlord will allow this first before advertising. Remember, you will be able to save on household bills as well as this will be shared with your lodger/flatmate or you can cover it in their rent. Either way, you will be able to save a nice amount each month to go towards your property deposit.

Don’t forget to check if this will affect your taxable income.

3. Cut out unnecessary purchases

This may seem obvious but sometimes we don’t realise that buying those perceived small items, can add up to a sizeable amount over the course of a month. Think twice before you buy your daily takeaway coffee and sandwich. It is worth saving receipts of such purchases for a month and adding up how much was spent at the end to see how much you could save by cutting down.

4. Save on travel costs

If you drive to work, speak with colleagues who come the same way as you. You could save a sizeable amount on petrol costs if you share rides and take it in turns to drive. Or if you live in an area with good public transport, consider using the bus or train a few times a week to see how much it could save you.

If saving a deposit is still unrealistic then there are a number of ways to get some help such as the Government’s Help to Buy Scheme, Guarantor Mortgages and Shared Ownership options.

Speak with Propillo’s helpful team of mortgage advisers for further information about mortgage deposits and any of these schemes. You can compare mortgages online for free, savings for everyone!

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