4 ways to raise your house deposit

Rising property prices have meant that house deposits have also had to rise in order for first time buyers to get on the ladder. But, unless you’re earning a top-grade salary or you receive a cash windfall, how are you meant to raise a deposit when rent is also sky high? We’re here to help. From savvy savings to Government bonuses, hopefully some of these tips will help to make the saving mountain seem a little bit more like a molehill. 

When it comes to mortgages, if you want the pick of the market lenders then a minimum of a 10% deposit is a good place to start. This means if the house you’re looking to buy is £150,000, you’ll need £15,000 for your deposit and then a buffer of around £5,000 for fees, fittings for your new place and just a general safety cushion. You could go as low as 5% but you won’t have as many mortgages to choose from in the long run, but this is totally up to you and what suits your specific circumstances.

How do you save so much money? Here are 4 ways to help make sure you’ve got enough saved up for your deposit with a buffer left over, too. 

1. Cut down on unnecessary spending
A.K.A saving. You knew this was coming. It’s time to curb that ‘Treat yo’ self!’ mentality a little bit and ask yourself whether you actually need some of the things that you spend your money on.

Could you move home rent-free or live with relatives? This will save you a whole heap of money if you have understanding and willing parents. For example, if your rent is £500 - you’ll save £6,000 on rent alone over a year as well as cutting the utilities costs you would now be splitting with your family. Alternatively, play the long game by quitting your £50 a month gym membership and moving to home workouts from YouTube. Although this may take longer - you could save £600 a year! Take a look at our #SavingSwaps to see how sacrificing some other everyday items can add up very quickly to bumper savings.
 
2. Government bonuses
There are two great options for gaining top-ups on your savings. Both Lifetime ISAs (LISA) and Help to Buy: ISAs offer a 25%* bonus on your savings. You can open a LISA between the ages of 18-39 and can pay in up to £4,000 a year. If you put in the maximum, you will get £1,000 bonus from the Government - every year. The money can be transferred to your solicitors to use towards your deposit, legal fees etc. The account is specifically created for first time buyers and retirement savers so if you try to take the money out for another reason, you pay a 25% withdrawal fee which means you could get back less than you actually paid into it. But, bear in mind you will have to have been saving for a year in order to withdraw the money for your house without paying a 25% penalty. 

A Help-To-Buy: ISA is an account where the Government will top up your savings with a 25% bonus on amounts saved between £1,600 and £12,000. You can deposit up to £1,200 when you first open your account and you can pay in £200 per month from then. One thing that is worth noting is that your bonus (maximum £3,000) from the Government will come through after completion of your house purchase. Use our calculator to see how much first time buyers can earn in bonuses.

3. The Bank of Mum & Dad (and Grandparents)

A whopping 81% of people we recently surveyed are expecting support from their parents to buy their first property so the bank of mum and dad is still very much open for business. They could have been squirreling away the pennies for years for you and you may just have to ask for a loan or a gift and they’ll jump at the chance of helping you out. Make sure they know that you’re serious about your house buying plans and speak to them about fronting some cash. They might surprise you! 

4. Buy together
A deposit shared is a deposit halved, that’s the saying, right? Well, if you’re looking to purchase a property with a friend, family member or partner then you’ll definitely be at your savings goal in half the time if you both stick to the same pace of saving. Make sure you agree targets and you make the same level of effort to get there. If you’re determined to get on the property ladder, this could be the way for you to get there as quickly as you’d like.

If you’re on the right track to saving up your deposit then it could be time for you to speak to one of our mortgage advisers at Nottingham Mortgage Services. Our expert advisers will search over 50 lenders to find the right mortgage for you, yes, even from other banks and building societies! And, if you leave without a mortgage from The Nottingham, we’re happy as long as you’re in a good place to move onto the property ladder. 

*The 25% bonus is provided by the government. The Lifetime ISA can be opened by customers aged between 18 and 39 years of age that reside in the UK to either save for their first house purchase or their retirement. The product has a 25% charge associated with any withdrawals that are not an eligible life event (first house, aged over 60, terminal illness and deceased). Investors can pay in up to £4k per tax year into their Lifetime ISA and the government will pay a 25% bonus on a monthly basis from 6th April 2018. Customers cannot pay into their Lifetime ISA from the age of 50+ or earn the 25% bonus. If you save in a Lifetime ISA instead of enrolling or contributing to a pension scheme, you may lose valuable employer contributions. Entitlement to any means tested benefits may be affected. The 25% withdrawal charge is on everything (deposits made, bonus and interest). You may get back less than you paid in. For full terms and conditions please ask branch staff for our Keyfacts document and summary box.

Whole of market mortgage advice is provided by Nottingham Mortgage Services Ltd; an appointed representative of Intrinsic Mortgage Planning Ltd, which is authorised and regulated by the Financial Conduct Authority; registered No. 440718. Nottingham Mortgage Services Ltd is registered in England and Wales, No. 03089887. Registered address: Nottingham House, 3 Fulforth Street, Nottingham NG1 3DL.

Your home may be repossessed if you do not keep up repayments on your mortgage.
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