How to Save for a Mortgage Deposit

If you take out a mortgage then you will need to put down a deposit in most cases. The deposit is a lump sum of money, that will be used to pay off some of the property that you are buying. Most lenders will require one and it can be a significant amount of money – often up to 10% of the value of the property. This means that you will need to put a big effort into saving up. However, there are things that you can do to make saving up easier.

Set up a Dedicated Account

It is a good idea to start by setting up a dedicated account where you will be able to put the money that you are saving up. Keeping it in a different place to where you put other savings will mean that you will not accidently spend it on other things. It also means that you will be able to see how much you have more easily and hopefully that will encourage you to keep on saving.

Pay Money in Each Month

In order to make sure that you keep adding money in then it is a good idea to set up a regular monthly transfer that will pay money into the account regularly. This will allow you to be able to make sure that you are building up the savings. It can be tricky knowing how much to transfer, but look back at your bank statements and see how much you tend to have left over at the end of each month and use that amount. You can always change it and add in extra lump sums of money when you have them available.

Cut Down Spending

It can be a good idea to have think about whether you can cut down your spending. It is something that might feel really hard but actually can be easier than you might think. Firstly, you might be paying more than necessary for the things that you buy and if you switch to a cheaper provider, retailer, brand, insurer, lender etc then you could save a lot of money. Do consider value for money though as you do not want to have replace things more quickly because you have not paid out enough money for them. However, you also need to think about the fact that if you do switch then you could notice no difference at all apart from the fact that you are paying less. It can therefore be a good idea to think about all the things that you buy and whether you can buy them cheaper and save money. Even small savings can be significant when you add them all up.

Another way to spend less is to buy less things. This can feel a lot harder than buying the same number of items and paying less for them. Although it will take time to compare prices and choose the items that will provide the best value for money, it will not feel like you are depriving yourself. However you may need to cut down on non essentials if you want to have more money available to save.

Consider Earning More

It can be a good idea to think about whether you might be able to earn more money. You may be able to take on more hours of work, to try to get a better paid job, but that is not always easy. It could be easier to sell items that you own and no longer need or to find some freelance work online or temp work. There are likely to be opportunities available but you will need to think about what will suit you. You may find that online work is not paid so well, but you may feel that it is still worth doing because you will be able to earn that extra money that will mean that you can buy your home sooner.

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