Stepping onto the property ladder is a big accomplishment and there are many great things to look forward to during the process; from accepting the keys to furnishing your new home and starting a new chapter of your life.
Making a big financial commitment may feel daunting and for most, saving in advance will be essential. For over 160 years’ we’ve been helping our members save for the important things in life; and in this article, we’ll be covering some top tips for first-time buyers.
How much can you borrow?
A bank or building society may be able to lend you money towards your property, but to take out a mortgage, you’ll need a deposit. The amount you can borrow depends on the product, who’s offering it, and your individual circumstances; such as credit history and monthly outgoings.
If you’re saving for your first home, you’ll need to establish how much you can borrow; this will give you something to work towards and you’ll get an idea for how much you need to save.
Saving for your deposit
The size of your deposit depends on the price of the house you’d like to purchase and how much deposit is required from your lender. For first-time buyers, this would typically be between 5% and 20% of the property value.
If you can afford a larger deposit, you could owe less money on your mortgage in the long run. By saving in advance and putting more money towards the deposit of your new home, you could take out a shorter mortgage term or benefit from reduced monthly payments, but your lender or mortgage advisor will talk this through with you.
When it comes to saving for your first home, it’s important to establish your goals, cut down your outgoings, and set yourself challenging, but achievable targets.
If you’re hoping to save a lump sum of money, starting a budget and setting aside money each month is a great start. Breaking your goals into small, achievable targets can help; if a 10% deposit feels unachievable, save 5% first and start saving again.
If you’re already saving, ask yourself: “Am I getting the best deal?”. A fixed rate savings account allows you to earn a fixed rate of interest on your savings for a set period of time; which may be ideal for those long-term goals. Or, if you choose to store your money in an Individual Savings Account (ISA), you could take advantage of the tax-free allowance, set by the Government each tax year.
A savings provider you can trust
Here at the Marsden, our friendly branch teams are always on hand to discuss your options and help find the account that’s right for you. Our range of savings accounts can be opened remotely by appointment only. If you’d like to arrange an appointment with your local branch, you can find their details on our ‘Find a branch’ page.
Alternatively, you can view our current mortgage range on our dedicated ‘Mortgages’ page.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.