Tips on How to Save for Your Mortgage Deposit
Being a first-time buyer has never been so hard. The pressure we all go through to set up a nest somewhere is high, and saving for a mortgage can feel like an impossibility.
You may be in a position where you are currently renting. Saving for a mortgage deposit can be extremely tough. You will have normal household expenditure such as rent and other bills.
Whether you are saving for a 2 bedroom flat for sale in Wymondham or 4 bedroom house in Cirencester, there are some great ways you can save.
Saving a mortgage deposit is a big and long term commitment. You need to be 100 percent sure that this is what you want to do. The financial marketplace is full of products that can help you save money.
Here are a few ways in which you can save for your mortgage deposit:
Cash ISA
Saving money within a cash ISA is probably the most common way in which people save money. You have the potential to earn a good rate of interest on your money. Some cash ISAs give you the chance to save up to £15,000 in the next tax year.
Traditional Savings Account
With rates at an all time low, saving money for a mortgage deposit is tough. Cash ISAs have suffered because of this. You may feel that your money would work better in a standard savings account. So, be sure to check and compare the rates of interest on both financial products.
Savings accounts do have some restrictions attached to them. You may be limited to the number of withdrawals you can make from them each year. In addition, how you withdraw money from them can be a real pain. They certainly are not as easy access as typical cash ISAs.
Instant Access versus Fixed Rate Savings Accounts
Fixed rate savings accounts are ideal for those who know that they will not need to access their funds. They tend to offer better savings rates if you promise not to access your funds over a year or longer. If saving for a mortgage is going to take time, you should utilise these fixed rate saving accounts.
Instant access savings accounts do offer some flexibility when it comes to accessing your money. However, most offer a lower rate of interest due to the instability of having the money within the account to accrue interest.
Investment Products
With saving rates so low you may be tempted to take out an investment product. This comes with their set of risks. With any investment product, they can make you money and lose your money. You are not guaranteed to take out what you put in.
Although not recommended, especially when saving for a mortgage deposit, it is good to keep your options open. Exploring this option, even if it is to rule it out, is a useful exercise.
However, you decide to save for your mortgage deposit, have a realistic and achievable plan. You will soon start seeing the benefits of your savings growing before your very eyes.
