The thought of actually owning your first home is an exciting one, but it can also be a time that is filled with questions and concerns about money. Not only do you have to think about what kind of price you can afford, you also need to try and find enough cash to cover the deposit.
While some lenders will give you the total cost of the property without requiring a deposit, it’s better to provide one if you can because you will pay less money in the long run. The key is to work out how you can get the deposit you need.
The general rule of thumb is that the more you can put down in advance, the smaller the mortgage you will need. That in turn means less interest which is good news for you. But five to ten per cent of the cost of a house can be a lot of money, so you need a good plan to work out how to get that amount of money.
First of all, consider what savings you already have put away. The best tactic is to start saving towards a deposit long before you decide you want to start looking for a property. This will give you plenty of time to save up a reasonable amount of money. If you can, try and put away a set amount every month by setting up a direct debit from your current account straight into another account you have set aside to keep your deposit in. Ideally you should keep this separate from any other savings you might have.
You might also want to earn more money towards your deposit by doing some overtime at work. You can also earn more by selling unwanted possessions and items on auction sites online, via car boot sales and through local ads. You may be very surprised at just how much extra cash you can find for that deposit when you try.
When you have saved up a reasonable amount of money, start looking at houses for sale in your desired area to see what kind of deposit would be adequate for the properties you are looking at. You’ll then have a better idea of how close you are to having the money you need.
Bear in mind that you can also ask close family members to loan you an amount of money towards your deposit. If you do this though it’s always best to set up a specific time limit for paying it back and make sure you agree on a monthly repayment figure. Even though the money has been lent to you by someone you know, it’s still important to treat it just as you would any other loan.
So long as you take a pro-active route towards finding that deposit, you might be buying the house of your dreams sooner than you think.
Daniel Collins writes on a number of topics on behalf of a digital marketing agency and a variety of clients. As such, this article is to be considered a professional piece with business interests in mind.
