Saving for a Mortgage Deposit, Despite Today’s Market: A Handy Guide

Let’s face it…saving for a mortgage deposit can be enough of a challenge during much simpler economic times. So, how does one go about it during a cost-of-living crisis?! There’s no denying that, in a tougher financial climate, it becomes tougher to save for anything – let alone something as huge as a mortgage.

The Unity Mutual team is here to help you towards your goal, though, thanks to our handy guide to saving, despite today’s market. While first-time buyers might have to accept that it will take longer to get on the property ladder, it can still be done. Here’s how:

Don’t Overstretch Yourself Financially

We get it; when you have your hopes firmly set on saving for your first property, you will be nothing short of determined to reach that goal. Don’t overextend yourself financially, though, in a race to have the money you need to put down on a house.

Instead, think about the future in much broader terms. For example, while you might find that you can still save some money now – by making a few extra cutbacks – what would happen if, when the property market settles, you can’t move from your new home?

The sentiment is echoed on the inews site, with this piece stating: ‘…if the property market does cool off by 10 per cent, or even 15 per cent from now, will you be happy in that home for another six or seven years, before moving again? Is it the right location for you? Does it have enough space? Long term thinking will pay off.’

In the property game, it’s a marathon and not a sprint – start saving and don’t jump too soon. Bide your time and it will be more likely to pay off for you in the long run.  The longer you save, the more interest and bonuses you’ll be accumulating in the meantime*, and this attitude could stop you settling for anything less than what you really want.

Make the Most of the Government’s LISA Scheme

What’s a LISA? It stands for Lifetime ISA** and it’s a savings account designed to help first-time buyers save for a property.

For those looking to buy a house up to £450,000 (that’s the maximum you can spend on a house under LISA rules), the Government scheme will give you a bonus of up to £1,000 a year to top up your deposit. Anyone aged between 18 and 39 can save up to £4,000 a year (which gives you the maximum government top-up of £1,000).

You see, whatever you put into your account – up to £4,000 per year – the Government will add another 25% on what you’ve saved. It really is a win-win situation, so if you’re considering saving for a first home – during the current financial crisis or anytime – set up a LISA and reap the rewards.

Find the Best Mortgage Deal

Mortgage lenders may take rising costs into account when assessing your position to buy a property. Keep this in mind when you’re saving for a deposit, find a reliable and trusted mortgage broker as soon as you can, and prepare your finances to give yourself the best chance possible of securing the right deal for you.

Again, it’s all about hanging fire until the time is right; there is no real rush to the finish line when embarking on a house move. Instead, make sure your financials are in order before you take the leap.

Keep Going!

While you may not think it, it could actually be a very wise choice to save for a home during the cost-of-living crisis. Renting can benefit you in the short term, as you’re not draining your savings into expensive household repairs, such as a broken boiler or leaky roof. But, in the long term, you’re paying off someone else’s mortgage.

Many people are reassessing their current position, with those who are renting eager to own their own home – and sooner rather than later.

Any amount you can put aside is better than nothing and your funds will likely build up sooner than you think. Consider ways you can cut your costs; if it means going without a few little luxuries here and there, such as saying no to takeaways and meals out (or even trips to the hairdresser, over a box hair dye kit, for example?) why not?

Take baby steps and, little by little, your savings pot will start to grow. It all starts now!

Want to learn more about our financial products – their terms and conditions and how they might help you save for that mortgage deposit during the cost-of-living crisis and beyond? Head here and do not hesitate to contact us if you have any questions at all.

Until next time…

*Interest and bonuses may vary depending on which product you choose to use to save for a home, and which provider you take it out with. The Unity Mutual Lifetime ISA currently offers the 25% Government Bonus and a 3% interest rate. See here for more information.

**Terms and Conditions apply to all our products, please visit https://www.unitymutual.co.uk/savings-for-you/ for more information.