How to save money for a mortgage – 20 tips for saving for a house deposit!

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Saving for a mortgage has certainly got tougher over recent years. With the cost of living super high, rental prices through the roof and interest rates higher than they’ve been in years, getting on the property ladder is no easy feat.

But, if you’re desperate to own your home, here’s how to save money for a mortgage – with 20 tips for saving for a house deposit to help you to achieve your dream:

1. Set Clear Goals

Determine the amount of money that you need for a deposit on the type of home you’ll want to buy. In the UK, the minimum down payment is usually 5% of the property’s value, but not all lenders will allow this, and you’ll typically need to save 10-20%. It’s important to remember that a larger down payment can also result in better mortgage terms and lower monthly payments which will make a huge difference to your finances long-term.

 

2. Create a Budget

Review your monthly income and expenses to create a realistic budget. This will help you identify areas where you can cut costs and allocate more money toward your savings goals. To get started use my budget tips and tracker: How to create a family budget and understand your finances.

Budget tracker frugal mum

 

3. Open a Dedicated Savings Account

Open a separate savings account specifically for your house deposit – this will help you to keep your savings separate from your day-to-day spending. If you can tie your money in for a while, you’ll get a much better return on your savings too, so find an ISA with a good rate and leave the money alone to grow.

 

4. Automate Your Savings

Set up automatic transfers from your current account to your dedicated savings account on payday. This ensures that you consistently save a portion of your income, and it’ll be out of your current account before you’ve had time to notice it!

 

5. Reduce Unnecessary Spending

Identify non-essential spending that you can cut back on. This might include dining out less frequently, reducing entertainment expenses or cancelling unused subscriptions. You’ll need to get over your fear of missing out for this one, but you don’t have to go without just change what you do. Invite friends over instead of going out, make packed lunches, switch gym memberships for a run around the block, and explore the world of second-hand to keep your expenditure as low as possible. Check out:

The Ultimate Family Frugal Living Guide: 25 simple tips to save you money!

ultimate family frugal living guide, frugal mum tips, 25 ways to save money, simple lifestyle

 

6. Increase Your Income

Look for opportunities to boost your income, such as taking on a lodger, starting a side hustle (perhaps using some skills you have like crafting or upcycling furniture), freelancing, or selling items that you no longer need. Been in your current job for a while? Perhaps it’s time you asked for a raise. For more easy income boosting ideas, check out my post: 10 ways to boost your income.

woman sewing

 

7. Go All In

One option is to drastically go all in for a year or two – spending on nothing but essentials, skipping holidays, doing special occasions like Christmas on the tightest of budgets and perhaps even selling your car to really maximise what you’re able to save. It might not be much fun, but if it owning a home is really important to you then it might be worth a go!

 

8. Take Advantage of Government Schemes

In the UK, there are government schemes like the Help to Buy ISA (Individual Savings Account) and the Lifetime ISA (LISA) that provide incentives and bonuses for first-time homebuyers who are saving for a house deposit. So, it’s definitely worth doing your research to find the best place to put your money – and any extra help that you can get is always a win!

 

9. Reduce Debt

Pay down high-interest debts as they can eat into your ability to save. By prioritising paying off credit card debt or loans with high interest rates, you’ll prevent compound interest from eating up all of your free money. Having lots of debt will also reduce the amount that the bank will lend you for your mortgage – so it’s important to get anything owed down to a minimum.

 

10. Try a Saving Challenge

Saving challenges are a great way to really focus on reducing your outgoings, and they can be a great way to boost your savings quickly. To get started, check out my my post: The 12 best money saving challenges to try today!

money saving challenges piggybank

 

11. Monitor Your Credit Score

A good credit score is crucial for obtaining a mortgage with favourable terms so regularly check your credit report and take steps to improve your credit score if necessary – be smart while you’re saving.

 

12. Borrow From Family

If it’s an option, could you borrow some funds from family and repay them later? We had our children young and had a low income when they were small, so for us borrowing from family was a total lifesaver. We repaid people monthly, and then remortgaged two years later (when I was back in work, the house prices had gone up and we could borrow more) to pay back the rest.

 

13. Shop for the Best Mortgage Deal

As you save, research and compare mortgage offers from different lenders so that, when the time comes, you’ll be well prepared. It’s important to understand the different types of mortgages and their associated costs and benefits.

 

14. Save Money on the Essentials

It’s not just the extras that up, so finding ways to reduce your necessary expenses is also really important. For instance, think about how you could reduce your weekly food bill, use less fuel or lower your energy costs – even small amounts add up quickly when the savings are regular.

Have a look around my website for lots of ideas, but check out these posts to get started: 

family shopping

 

15. Consider Other Costs

Don’t forget that the cost of buying a home goes well beyond the down payment. You’ll need to budget for other expenses like solicitor fees, survey costs, removal vans and stamp duty. When you move in you’ll likely want to decorate, and you may need to do some more necessary work to your new house too, so don’t forget to factor that in as well.

 

16. Stop Renting

If you don’t have kids (or you do, but you have really patient parents 😉) could you temporarily move back in with Mum and Dad to lower your living costs, or house share with a friend? If that’s not an option, could you rent a smaller place ,or something in a cheaper area, to keep as much as your income as possible at a time when rental prices are insane?

 

17. Avoid Major Financial Changes

Avoid making significant financial changes, like taking on a large new debt to buy a new car, while you’re saving for a mortgage as these can affect your eligibility. But, if you can change your job for a higher paid role then definitely go for it!

 

18. Be Patient and Persistent

Saving for a mortgage deposit can take time, so be patient and stay committed – try to set yourself lots of small, realistic targets to give yourself a frequent sense of achievement so that your end goal doesn’t seem so unreachable. Finding things difficult? Read my post: Why is saving money so difficult? (And what you can do to overcome it!)

piggybank

 

19. Think Outside the Box

If you’re still young, free and single, could you get your first step on the ladder by buying with a friend? That way you’re not just splitting the deposit but also mortgage payments and maintenance costs too.

Another speedier way to get on the ladder is to relocate to a cheaper area (or country!), buy a project, or choose a house / apartment that’s smaller than you’d like. It’s usually pretty unlikely that you’ll get your dream home right away but if you can compromise a little, or roll up your sleeves and add some value yourself, you might be able to own your own home more quickly – then move on later down the line.

 

20. Seek Financial Advice

Consider speaking with a financial advisor who specialises in mortgages. They can provide personalised guidance and help you create a savings plan tailored to your circumstances. Remember that saving for a mortgage is a long-term goal that requires discipline and dedication, but work hard, stay focussed and hang on in there, and you’ll soon be the proud owner of your very own home!

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