A house is likely the most expensive purchase you will ever make and unless you have access to hundreds of thousands of pounds, you will likely need to take out a mortgage loan in order to afford one.
Mortgages were created to allow people to become homeowners without needing to front the entire cost of purchasing a house in one payment. This has made it much easier for people to live comfortably in their own homes.
However, just because mortgages allow you to pay for your home monthly, does not mean there are no large initial costs associated with taking one out.
In order to be approved for a mortgage, you will need to have a deposit ready and waiting to be paid in order to close the deal and purchase your house. While this is significantly less than the cost of the entire home, it is often still tens of thousands of pounds.
For this reason, many people still have to save up for many years before they can take out a mortgage. However, if you are hoping to purchase a home within a smaller time frame there are several steps you can take to try and accumulate the funds to put down a deposit sooner.
First, you will want to work out how much you can afford to borrow. This will give you an indication of the price range of houses you will be able to purchase and therefore you can work out how much your deposit will be.
Deposits are usually between 5% and 15% of the total house price. For example, a house worth £250,000 with a deposit of 5% would require you to save up £12,500, 10% would be £25,000 and 15% would be £37,500.
Once you have worked out how much you need to save, you can put together a realistic time frame in which you need to save it. To save up a 10% deposit in three years, you would need to save around £8,300 a year. This works out at just below £700 a month.
It is important that you choose a time frame that is affordable to you as if you end up in financial difficulty you will find it more difficult to acquire a mortgage loan and you may also end up paying much higher interest rates.
Once you have come up with a plan to save, you can start putting money away. Saving a chunk from your monthly paycheck is a wise idea if you can afford it, and you may wish to find other sources of income to add to the savings pot.
If you have a spare room in your current home, renting the room out for additional income is a great idea and you can always choose to rent to a friend or family member if you are hesitant about living with strangers.
Another great way to save is to downsize your current accommodation. If you are paying a lot in rent, it will be much harder to save money for a mortgage therefore temporarily downsizing to a smaller space may be a good idea in the long-term as it can help you reach your goal faster.
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Your home may be repossessed if you do not keep up with your mortgage repayments.
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