Hoping to save for your first home in 2021?
Posted on 17th February 2021
Saving up enough money to take the first step onto the property ladder is an exciting time, but can also be daunting when you first start out. Here are some tips to build your savings quickly:
1. Create a savings habit
You’ve decided the time is right to start saving for your own home, but don’t know where to start? Not many of us have spare cash at the end of each month to pop into a savings account, but by looking at your outgoings you might be able to see where you can cut back, or perhaps stop any unnecessary spending. Putting money away at the beginning of each month can help create a savings habit as well as budgeting throughout the month.
2. Open a separate savings account specifically for your deposit
By opening a separate account and keeping the money aside from day to day spending will stop you being tempted to ‘dip in’ when things get tight at the end of the month. There are lots of savings accounts to chose from and you’ll find the right one for you by considering:
- how much you need to save
- how regularly you will deposit money
- how often you might need to access this money
- any time limit on when you want to withdraw the funds to purchase your dream home
Many banks and building societies now offer savings accounts for prospective home owners. For example, our Homestart Regular Saver offers a competitive interest rate and is specifically designed to help local young people save up to £150 a month. And if, after saving for 12 months, you decide to take out a mortgage with us you will benefit from no arrangement fee and £500 cash back.
3. Research the mortgage options available to you
Rising property values and stricter affordability requirements can make life challenging for first time buyers and it might feel like you’re never going to reach your savings goals. But you might not need to save as much as you think.
One solution might be a ‘Joint Borrower Sole Proprietor’ mortgage. This is designed to help borrowers enhance mortgage affordability by adding one or both parents to the application as joint borrowers without adding their name to the property deeds. The parent’s income is taken into account, but the applicant remains the single named owner on the property deeds. This feature is available with our Standard Residential and Buy For University products. Also, with our Buy For University mortgage the applicant can benefit from tax breaks in respect of the rental income.
4. What do I do next?
Use our Mortgage Selection Tool and Mortgage Affordability Calculator to get an idea of the types of mortgages available to suit your circumstances as well as how much you might be able to borrow. Doing this sooner rather than later might give you a better idea about how much you need to save for a deposit.
This blog provides general tips. It is not financial advice and does not take into account the financial situation of the reader. Our mortgage advisers are always available to talk about your individual circumstances.
Remember that your home may be repossessed if you do not keep up payments on your mortgage. So it’s important you budget for these payments once you’ve purchased the property.