Saving for your mortgage deposit

Estimated reading time: 5 minutes


Money Saving Tips

Saving for a deposit is hard! With house prices continuing to climb and the cost-of-living crisis affecting families all over the UK, it’s no wonder that the average age of a first-time buyer is creeping through the 30s.

In its simplest form, to get a mortgage you need three things:

  1. Good Credit
  2. Minimum 5% deposit
  3. Income

You most likely have the credit and an income, but saving a deposit in 2022 is probably the biggest challenge of all.  With this in mind, we wanted to give you our top money saving tips to help you build your deposit more quickly.

Record your expenses

The first step to saving money is by working out what you currently spend. This sounds very basic, but the reality is that most people don’t do it.

Write down all of your income at the top, then list all of your outgoings below, this will show you how much you have left over and how much you could potentially save.

Include savings in your budget

Now that you’ve made a budget, decide how much of the surplus you can realistically save each month. It’s important not to be overly ambitious as regularly going over budget will make you feel as you aren’t making as much progress.

Find ways to cut spending

To further your ability to save, you should find out ways to reduce your outgoings. Remember that pennies make pounds, and many small reductions will add up.

Could you be more organised with your food shopping? As the cost of food increases, this is a great place to start. Take prepared lunches to work with you and stop getting take-aways, delete the apps. Seriously.

Check if you are getting the best value for money. For example your mobile phone and internet packages. Be wary of introductory deals and make sure that everything is coming in on budget.

If you have credit cards, make sure you aren’t paying more interest than you should. Many credit card companies will offer free balance transfers with 0% interest which could help reduce your bill.

Set savings goals

Goal setting is important in all aspects of life, and even more-so when it comes to savings. If you have a goal in mind, you are far less likely to make impulsive purchases and waste money.

Set yourself SMART targets.

  • Specific
  • Measurable
  • Actionable
  • Realistic
  • Time-bound

Being specific means clearly stating your goal. So that may be to prep all your week’s lunches on Sunday evening.

You must ensure you can measure your success, so after the week is done, work out how much you’ve saved by being organised and give yourself a pat on the back.

It’s important that these goals are actionable, so a goal like ‘winning the lottery’ which is out of your control cannot be part of your plan.

Be realistic, if you set too many goals at once, or aim too high then you’ll be disappointed when you don’t achieve them. Take it gradually and once you’ve got to grips with one goal, move onto the next.

Lastly the goals that you set must be timebound. If you don’t give yourself deadlines, then you are just engaging in wishy thinking which won’t help you move things forward.

Work out what your financial priorities are

Financial Priorities will differ from person to person. If you are looking to make cuts, then first work out everything which you cannot do without. Be honest with yourself, if you have Netflix, Disney Plus, Amazon Prime and Sky, do you really need them all? Figure out which ones you could part with for the time being, and work out how much you’ll save each year by doing so.

Obviously, there are certain things which you cannot be without, such as insurance, food, or medication.

Swap take-away night for a cheaper alternative and allocate the savings to your deposit pot.

Pick the right tools to help

There are so many tools out there to help you save money. Some of these tools will connect to your bank account and round up transactions to the nearest pound and deposit the rest in savings. This may not work for you, perhaps you’d prefer a spreadsheet or something more rudimentary.

Make savings automatically

Your bank account will more than likely have a facility for this. You can allocate an amount of your wages to automatically go into a savings pot, or an ISA where you will earn interest against your savings.

When you save automatically you will soon start managing on less money, it’s funny, but many of us will spend whatever is in our bank account, so don’t leave it in there. Make it difficult for yourself to access your savings whimsically which will give you more thinking time before making an impulsive decision.

Now sit back, relax, and watch your savings grow

If you follow every step on this guide, you will save money. How much is largely up to you and how frugal you want to become.

Once you’re ready to get started, we will be here waiting for your call!

Prospect Tree Mortgages are independent mortgage experts based in the UK. We have access to the entire UK mortgage marketplace so are best placed to help you find the best deal for your unique circumstances.

Even if you don’t have a deposit yet, we’d still love to talk to you. It’s free to get in touch, so request a call today and one of our mortgage specialists will get you moving in the right direction.

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