- Saving money for a mortgage deposit
- 2. Take It Straight Out Of Your Pay
- How to save for a house deposit the smart way | ANZ
This week, a savings blogger tells i how she saved to get on the housing ladder in the North of the country. Nicola Richardson, 30, lives in Darlington with her husband Dave and their son, who turns two this month.
Saving money for a mortgage deposit
Ms Richardson runs The Frugal Cottage , a blog about saving money. Nicola and Dave are now saving to achieve their dream of retiring aged I got a job while I was studying at university so I managed to save a bit while I was there. Dave had already been putting some of his wages away. We actually got married in the same year we bought our house. We did manage to have our wedding on a budget, though both of our parents also gave us money towards that.
Dave and I cut back on everything and questioned all purchases to see whether we actually needed them. We started writing shopping lists and meal plans every week to ensure nothing got thrown away. Even now I meal plan religiously so that our fridge is empty by Friday.
You can turn cheap cuts of meat into something quite tasty with a slow cooker.
2. Take It Straight Out Of Your Pay
We made lots of stew-types meals with cheaper cuts such as stewing steak or chicken thighs. I used blogs such as an American one called Budget Bytes which costs meals down to the penny. Instead, there are different ways of buying a property without a deposit that still provides lenders some additional security. Taking out a loan to qualify for an even larger one in the form of a mortgage is frowned upon by lenders, and many will not consider you at all.
Generally, this comes down to the impact of affordability that taking a loan AND a mortgage may have, but mostly is because the borrower has not personally saved money in the game. As a result, they are considered a higher risk. If you can prove that you are able to afford the mortgage repayments as well as your other loan s , bills and outgoings, you may stand a chance. In addition, lenders will check your credit file to ensure you have clear history before confirming.
How to save for a house deposit the smart way | ANZ
Guarantor mortgages can help you get on the property ladder if you have a family member or close friend who is willing to help you out by securing the loan against a property they hold equity in, or their savings. Some lenders offer no deposit mortgages to borrowers who have guarantor support, as the security the guarantor has provided can serve as the deposit.
Well, sort of.
The lender will expect your guarantor to place money in a savings account they hold. They cannot access these funds until a time set by the lender, or until a certain amount of the mortgage has been paid off.
fensterstudio.ru/components/lipinel/naz-espiar-un.php Our guide to guarantor mortgages has more information on this. Typically, credit cards cannot be used for a mortgage deposit itself. However, by exception there may be lenders willing to consider using a credit card to top-up a cash deposit if short of the amount required, providing the card balance is affordable. Although it is extremely rare that a borrower would use a credit card to fund a deposit for their own home, some people will opt to increase their day-to-day credit card spending in order to save more disposable income towards a cash deposit.
This way, over time the deposit is in cash savings, and the debt is on a credit card, rather than savings spent. Vendor gifts are actually in the form of equity, and this is when a vendor offers a buyer a property at a discounted price. A landlord gift is again in the form of equity.
It's where a buyer purchases a property from the landlord at a discount purchase price, whereby the discount acts as the deposit. Lots of parents contribute some or all of a deposit to help their children buy their first home. Direct family such as parents, siblings and grandparents are usually accepted without question by lenders, but there can be stricter rules around distant family giving gifts.
However, you will be looked at far more favourably if you make your own financial contribution on top of the gift. For example, lenders will want to ascertain that the true market value of a property matches the original asking price before the discount was made. In almost every case, lenders will also want the buyer to match or at least contribute to the gifted deposit to prove their commitment to the investment. If you like this idea, in theory, but aren't comfortable accepting such a substantial gift from your family, you could consider using a springboard mortgage. This way, instead of paying a deposit, your parents, or other close family member, place an agreed sum of money into an account with the mortgage provider.
After three years your relative gets their money back with interest, as long as you've maintained the mortgage payments. Depending on your situation, you may be eligible for help from the government. These are often aimed at first-time buyers. The following schemes can help first-time buyers get a mortgage with little or no deposit, although that isn't to say the initiatives mentioned below are exclusively for first-time buyers.
This means that you will have a much smaller mortgage, and therefore need to save a far smaller deposit.
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The Right to Buy scheme helps eligible council and housing association residents in England buy their home with a significant discount. Buying your home via Right to Buy is very similar to the normal process in that you will still need to apply for a mortgage unless you can afford to purchase the property outright.
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However, many lenders will allow you to use your Right to Buy discount as your deposit , meaning you can potentially get a mortgage without paying any deposit yourself. However, this is quite rare and you may be open to more favourable rates if you also contribute to the discount out of your own pocket. Buyers are able to repay this equity loan at any time without incurring any charges. There's nothing more satisfying to a parent than being able to give their child a head start in life.
But what if your parents had started putting a little bit aside when you were born? Another tangible way family can help is by providing you with rent-free accommodation. If you don't have the advantage of rent-free accommodation, there's something almost as good. House sitting allows you to live in and maintain another person's home in their absence in return for accommodation that is often rent-free. A typical arrangement lasts from a few days to a few weeks, although some last years.
The cost to you is minimal, worked out on a case-by-case basis and may involve you having to look after the owner's pets or garden. Usually you only have to pay the standard utility bills electricity, gas, phone or, for longer arrangements, some of the long-term bills such as council rates, water rates and perhaps a token amount for rent. You will be required to pay a deposit which is refundable when the owners return to their home and find that it is in the same condition they left it in, of course.
Many of these houses tend to belong to affluent owners so, as a bonus, you may find yourself living in a sprawling home in a beachside suburb while saving more money than if you were renting a one-room basement hovel. Most first homeowners are eligible for the First Homeowners Grant. The requirements are fairly simple:. You may be eligible for substantial exemptions or concessions on stamp duty, so they're worth investigating.
Check out our stamp duty calculator to see how much you may need to pay. A good saving strategy is like a marathon, it doesn't matter what you do in the short term as long as you finish the race. Here are some tips to help you save more effectively:. Start as early as you can.
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The sooner you start, the more time compound interest will have to kick in and help build up your savings. Try and save at least 20 per cent of the purchase price so you can avoid paying lender's mortgage insurance. Make sure you have a demonstrated savings history - lenders will not lend you money if they don't know you are responsible when it comes to finances. Work out ways to save small sums of money regularly and add them to your savings. If will help establish a savings history and boost your savings. You can get better returns over a mid- to long-term period of time with non-banking financial institutions.
But you must balance risk against return - and you may not get a positive return. Share returns historically outperform other investment types over time but are volatile and may have large establishment fees. If you have time before you buy, it's an option worth considering. With sacrifice and no small amount of will, you can make owning your own home a reality. This article was originally written in June of and was updated for content and formatting in January of You're almost finished - want help finding the right home loan?