Top tips for saving up a mortgage deposit

Up until 2007, 100% mortgages were commonplace; in fact, 110% and 120% mortgages were also available, but since the credit crisis struck lenders have become a lot more strict with their lending conditions, with 75% LTVs (loans to value) becoming more and more common.

But, with the average house price teetering around the ?185,000 mark and the cost of living on the rise, how is a first time buyer supposed to get together a deposit in order to get a mortgage deal and make that first step onto the housing ladder? Here are some tips towards getting that deposit.

Get advice
It is a good idea to first speak to a mortgage advisor who will be able to help you work out how much you can afford to borrow. You can also use a mortgage calculator to work out the size of mortgage you can afford. Many financial websites offer free calculators which allow you to type in how much you earn, and work out the monthly payments your desired mortgage would cost you.

Research
It is imperative that buyers research the area in which they wish to buy. Looking at the sort of homes that are available and the prices that they are going for can help you work out how big a mortgage you are going to need and how long you will need to save up your deposit.

Start saving
Even if you cannot afford to save much each month, the sooner you start the better. It is always advisable to get as big a deposit together as possible. One tip on how to start saving is to try and put aside what you would expect to have to pay on a mortgage. That way the cash builds up and you get used to budgeting for when you do own a home. You should also try and save in a high interest savings account or a tax-free ISA in order to make the most of your money.

Budget
If you budget and keep a record of everything you spend, you may find some glaringly obvious savings that could be made. For example, do you need to buy your lunch each day, or is that gym membership really necessary?

Stop and think
Before you make any really big purchases, stop and think about whether you really need to spend that money, or if it could be put to better use as part of your mortgage deposit. If you make yourself wait for at least a week before making a decision you will often find that it would have been a ‘whim’ buy.

Shop around
Do not just settle for overpriced services – switch! With so many price comparison websites out there, comparing prices has never been easier. Use these services to find out if you could save money on your gas, electricity, broadband, phone, car insurance etc.

Join forces
If you are part of a couple, your joint savings will make it much easier to get a deposit together, but if you are single, it can be harder. However, there are now plenty of lenders who offer joint mortgage deals where up to four friends can buy together, which is a viable option if you’re looking to buy with friends as four lots of savings goes a lot further than one.

Saving for a mortgage deposit can be difficult, but with a little pre-planning and self-discipline it can be done — and easier than you might 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.