While setting aside a large sum of money as a mortgage deposit helps you reduce your mortgage repayments, it is important to start saving for the same well in advance. Depending on your circumstances and the lender’s requirements, borrowers often pay 5% to a whopping 20% of the loan’s amount as a deposit.
If you want to find a lender who asks for just the right amount of deposit from you, make sure you work with a skilled mortgage broker in your city. For example, if you are looking to purchase a property in Harrow, find the best mortgage broker Harrow offers. The right broker would scan the whole market for you and bring you deals in sync with your requirements.
If you want to set aside a handsome amount of money as your deposit, here are some of the most efficient ways to save for a mortgage deposit in 2022:
Control Your Everyday Spending
This is one of the most basic yet highly important mortgage deposit tips to keep in mind if you are willing to set aside a high deposit. Instead of saving large sums of money, you can always start by controlling your daily expenses and cutting them short.
You may not realize that your trivial daily expenses add up to a considerably big amount if seen on a larger scale. For example, if you spend £3 on buying a sandwich from a shop every day, you are spending £780 in a year for the same. If you switch to making yourself a sandwich at home, you can save a large chunk of this money that can be added to your mortgage deposit.
Take all your daily, weekly, and monthly expenses into consideration. Identify the areas where you can cut them short and start saving as soon as possible. These smaller steps would have a bigger impact by the time you make your mortgage application.
Cut Your Bills Short
The utility bills you pay on a regular basis amount to a big chunk of your expenses. To save money for your mortgage deposit:
- Make sure you keep a check on these bills and try cutting them short.
- Avoid using three fans in the house when you can do with one.
- Turn your television off when it is not required.
- Subscribe to a cheaper broadband plan and manage your tasks accordingly.
- Cancel the subscriptions you and your family can do without.
By cutting your bills short, you can gather enough money by the end of a year to make a difference in your mortgage deposit.
Start Preparing An Extensive Budget
The best way of saving money has always been to prepare an extensive budget. Please keep track of all small and big expenses incurred over a specific period and analyze them to figure out ways of cutting them short. Keep your expenses against your income and plan exactly how you will spend your money in the days.
Take different areas into consideration where you would be required to spend money over time, such as grocery expenses, utility bills, taxes, leisure expenses, etc. Identify the areas where you can curb your expenses and stick to your budget at all costs. Such an organized approach to saving money would help you gather a good mortgage deposit.
Add To Your Income
Apart from cutting your expenses down, the second-best way to save money for your mortgage deposit is by increasing your income. There are many ways to boost your weekly or monthly income. You can always find yourself a small additional job for your free hours or during the weekends to add to your family income. Irrespective of how nominal the job is, it would help you increase your income and save for your mortgage deposit. This, coupled with a reduction in your expenses, would help you pool the required money for your deposit.
However, it is important to note that you would be required to pay income tax and provide a self-assessment tax return for the new job you take up to add to your income.
Go For Help To Buy Equity Loan
This is an ideal option for saving money for your mortgage deposit if you buy a property for the first time. Help to Buy equity loan is a grant offered by the government to help first-time buyers climb the property ladder. Under this allowance, you can obtain financial aid for purchasing a property costing between £186,100 to £600,000, depending on where in the country you are buying it.
Consider The Option Of Joint Ownership
You can always choose to buy a new house jointly with your friends or family members. This would reduce all your expenses incurred in making the purchase. This will make buying a house more affordable and reduce your cost of living once you have moved into the new house.
However, it is important to understand that buying a house is a fairly long-term investment. Always choose the people you would be associated with for a long period before making the final decision.
Move Out Of A Rented House
If you can move into your parents’ house for a few years, it is advisable to move out of your rented house to save money for your mortgage deposit. Eliminating rent from your list of regular expenses would certainly be a big relief, helping you save up more for your deposit. Moreover, moving in with your parents, friends, or relatives would reduce the cost of living for everyone.
These were some of the most efficient ways to save for a mortgage deposit in 2022. As long as you are conscious about every penny you spend and earn, you can create the desired pool of money to pay your mortgage deposit in not more than a couple of years.