Buying your first home is a milestone in anyone's life, but saving for the deposit can be hard work. You can apply for a mortgage of 100% and can be very tempting do when the alternative is to save for several years, but you could end up paying a high price in the long run.
A mortgage of 100% means a rate of higher interest and greater possibility of being trapped in negative equity – that is, your house is worth less than the amount you still owe on it.
So how can you start saving for that all important deposits and make sure you reach the desired amount, as soon as possible?
The key to success is to save regularly, and the best way is to create a direct debit from your checking account to savings each week or month to coincide with payday. This ensures that you will not forget to transfer the money yourself, or be tempted to spend on something else. Remember, it is an investment in your future.
Shop around to find a savings account that offers a high interest rate, but still allows instant access to as might end up applying for a mortgage loan before you think, and you want to get to your tank when needed.
The effect of compound interest will help you grow your deposit faster after the first year will earn interest on your interest as well as its capital.
Another way to build a larger reservoir more quickly is to cut your household bills and expenses. Try keeping a diary for a month to see where your money goes – be surprised the amount of savings that you can do, all of which can go into that savings account.
If you are currently renting your home, you can try shopping around to find cheaper gas suppliers and electricity – that many offer additional discounts for taking both fuels and debit payment bank. You can also get better deals on phone service, Internet access, mobile phone and many other regular outings. Take note of the savings they are doing and adjust the amount you're putting into your home trust fund accordingly.
Another way to get your deposit faster is to ask family members for help. It may be an easier alternative to an instant access savings accounts loan from a bank, although yet to settle their finances before accepting this type of loan, make sure you will be able to return it as agreed. Defaulting on payments to a family member can be as stressful as defaulting on a bank or building society – tread very care if you are going to take this option for all or part of the deposit amount.
It may be hard work for the savings deposit, but with an effort regular it could reach its goal sooner than you think.