A recent study by Santander Mortgages shows that 70% of young people now believe that the homeownership dream is over for them.
Miguel Sard, managing director of Santander Mortgages, said: “It’s clear that while the aspiration to own a home is just as strong as in previous generations, it’s a dream that is looking increasingly out of reach.
Although 91% of the young people interviewed still aspire to own a home, over two-thirds said it was unlikely to happen unless they received the deposit from their parents.
Let’s face it truly, saving up a mortgage deposit is one of the biggest hurdles to getting on the property ladder.
With house prices rising, first-time buyers often need to put down tens of thousands of pounds as a deposit.
According to MoneySuperMarket data from the first half of 2018, the average deposit put down by first-time buyers was £43,433. That was for an average property price of £217,200, giving a loan to value (LTV) average of 82%.
How much of a deposit do you need to save?
The average house price in the UK is around £232,554, according to Land Registry official data for October 2018. To buy a property worth that sum, you’d need to save at least £11,628 for the minimum 5% required by lenders.
Putting down 10% would give you access to cheaper deals, would require you to save £23,255, while a 25% deposit would mean getting together a whopping £58,139.
Unless you’re earning a fortune, or are lucky enough to have family stump up the cash on your behalf, making a mortgage deposit means saving hard.
But it doesn’t have to be that hard for you, and you don’t have to have fears for the future. So let’s look at
7 ways to raise your mortgage deposit.
1. Pay up your debts.
Anyone who is serious about getting a mortgage will know that credit card debt will directly affect the amount you can borrow. And it’s easy to let that debt spiral out of control, so it’s best to get on top of it as soon as possible. You so not debts increasing while you’re bootstrapping to save up.
2. Downsize your lifestyle
Do you really need to be renting a three-bedroom loft when it’s just the two of you? Could you cope with a larger house share where bills are split more ways and the rent is cheaper? The short-term pain may well be worth the long-term gain.
Weigh up how many bedrooms you need and look for cheaper accommodation closer to work, so you save on commuting costs.
Downsizing could also mean you save money on heating, council tax and other household bills, so you can put even more money in your deposit funds.
3. Work more jobs
you want a great idea on how to get a house deposit quickly then there is almost nothing better than creating a second income for yourself.
Almost everyone can create a second income for themselves. You could live off your primary income and then save all of your secondary income.
It is likely that you could be using your current skills outside of your workplace. If you work as a mechanic, then you may be able to fix your friends cars on the weekend.
If you work as a writer you could do freelance writing on the side. If you work as an accountant you could help people with their tax returns. Anyone can outsource themselves on sites like Odesk or Elance. Alternatively you could start a small business on the side. Get clients and do the work in your after work hours. Or build up passive income by starting a website and selling affiliate products. You are only limited by your imagination.
4. Sell unused belongings
Look through your belongings and think carefully about if you use or need them. If not, sell them.
Car boot sales and eBay are not your only options. Check out alternatives like Schpock and Depop too.
5. Take advantage of special programs.
If finding money for a deposit is holding you back from buying a property you may find a shared ownership home is a more affordable alternative.
Shared ownership and shared equity schemes involve purchasing part of a property and renting the rest, and although you would not own 100% of your home right away, you will have a foot on the property ladder.
Help to Buy scheme
Help to Buy is a government scheme offered by lenders in England on new build properties.
The scheme provides an equity loan that can be used towards buying a house, if you only have a 5% deposit saved.
You must be over 18 to qualify for Help to Buy, and it must be used to buy your own home on a repayment basis (not interest only).
6. Get assistance
If you’re lucky enough to have friends or family with money to spare, they might be able to help you raise a deposit, or help you get a guarantor mortgage.
7. 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 a way for you to get there as quickly as you’d like.
These 7 ideas will help you save up your first home mortgage deposit, but there’s one more question.
Can you get a loan for a mortgage deposit?
No, taking out a loan to cover the cost of your mortgage may mean that lenders won’t accept your application.
This is because they will ask where your deposit has come from, and state that it needs to be from a non-repayable source, like savings or a gift.
Do you want to know more about how to raise the funds you need to a get a home as a first-time buyer?
Send me an email at mayowa(at)mayowaoluyede(dot)com
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