Saving for your first home
A typical first time buyer would usually require a minimum deposit of 20% in order to be approved for a mortgage. If you look at the average house price in September 2011 you would need £33,251 for a house priced £166,256.
Due to a tough few years with the economy, many lenders have reduced their lending, putting a tough criteria in place which has reduced the number of people eligible for mortgage deals. This has resulted in the current situation that we now find ourselves in, with many first time buyers struggling to get onto the property ladder at all.
It didn’t seem so long ago that lenders approved mortgages more freely, with little or no deposit required. We are now back to how things were many years ago, where larger deposits are needed and mortgages are harder to come by.
With all of this, here are out top five tips to help you save for a deposit.
- Set up a cash ISA (Individual Savings Account) you can benefit from up to £5,340 a year in tax free interest, meaning you can save more.
- Set up a standing order to your savings account so that you guarantee a certain amount will be paid into your account each month.
- Cut back on non-essential spending to make sure you are saving as much as possible. You could try walking to work instead of driving, or sacrifice the odd night out or takeaway.
- Get extra hours at work or get a second job to increase your income, everything you earn can go straight into your savings account.
- If you are renting a house or flat you could consider house sharing to reduce your bills, with the savings going straight towards your deposit. Or you could consider moving in with friends or family in order to reduce your living costs.
This entry was posted on Friday, October 28th, 2011 at 8:43 am and is filed under First Time Buyer. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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