How to Save for a Mortgage Deposit as a First-Time Buyer

For many people, saving for a mortgage deposit can seem like an impossible task. With rising bills and rents, putting enough money aside can be difficult, especially with many lenders requiring at least 5-10% of the property’s value. Read on to find out key strategies for saving for a mortgage deposit.

Work Out How Much You Need

The first step to take when saving for a mortgage deposit is to calculate exactly how much you need. Take a look at suitable homes for sale in your preferred area, taking note of the asking prices. If you’re interested in a property that costs £250,000, a 10% deposit would be £25,000. Knowing how much you need to save gives you a clear target to work towards.

Set Up a Dedicated Savings Account

One of the best ways to save a mortgage deposit is to separate these funds from your usual everyday spending money. Look for a high-interest savings account or a Lifetime ISA (LISA), which gives you a 25% government bonus on your savings. To be eligible for a LISA, you need to be a first-time buyer and use the funds for your first home.

Cut Costs Wherever Possible

Saving for a deposit may require you to cut costs. This could mean cancelling subscriptions you no longer use, eating out less, or switching to a cheaper energy supplier. These may seem like small changes, but collectively they can make a big difference to your finances. Go through your bank statements to work out where you can reduce your outgoings. 

Boost Your Income

Increasing your income can seem difficult, especially if you already work full-time. However, with side hustles, freelancing, or even a part-time job, you can boost your earnings over time, sometimes significantly. Even selling unwanted items online or at car boot sales can help turn the pennies into pounds for your mortgage savings. 

Avoid Accruing New Debt

Getting into debt doesn’t just make it harder to pass a lender’s affordability checks when applying for a mortgage; it can also make it harder to save the deposit you need. High-interest debt from credit cards and loans can eat into your savings, making it crucial to pay it off and avoid taking out new credit. Be strict with yourself by sticking to a budget and tracking every expense whilst saving for a mortgage deposit.

Saving for a mortgage deposit can be tough, but it’s possible when you manage your finances wisely. At Mortgage Matters, we can help make the process easier, offering access to thousands of deals from a wide panel of lenders across the UK. Get in touch to discuss your options with our team of experienced mortgage specialists.