Buying your first home is an exciting time, but saving for a mortgage deposit can be a challenge. A savings plan can make all the difference.
To be able to start saving for a home, firstly you need to get an idea of how much you need to save.
Many mortgage lenders have an online calculator that will help you establish your price range by giving a quick indication of how much they will lend, what your repayments will be and how much of a deposit you will need.
Bear in mind that these calculators are for illustrative purposes, based on the product range on offer at the time, and the result doesn’t constitute a mortgage offer which would require a full application.
Typically, mortgage providers will lend you a percentage of either the purchase price or property valuation, whichever is lower. The rest is what you need to save for your deposit. Bear in mind that the more deposit you put down, the less you need to borrow.
Once you know how much you need to save, a review of your finances will help you make a plan. Make a list of your monthly income, including basic salary and any regular overtime/bonuses, and then compare it with your outgoings.
Include as much as you can to build an accurate picture, including everything from rent, bills and groceries to leisure and transport expenses. Don’t forget little luxuries add up too – a couple of pounds a day on a smoothie on your way to work could be costing you more than £500 a year.
With these figures at hand, you can work out what you can save each month. For example, if you were aiming to save a £20,000 deposit:
Time to save £20,000 saving = 27 months
*Figures are for illustrative purposes only, based on annual salary of £30,000.
Don’t forget you may also need to factor in additional costs to buy a home, such as valuation fees, stamp duty and legal fees. The Money Advice Service can help you build a picture of the upfront fees you may need to take into account.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
There are lots of ways to boost your saving potential over the short and longer term.
Once you’re nearing your savings target it’s a good idea to approach your lender for an ‘agreement in principle’. Our dedicated mortgage advisers can tell you how much you could borrow – or you can check online – without leaving a mark on your credit history, and without committing to buy. This agreement in principle would be valid for 90 days so you can find your new home with confidence.
If you’re uncertain about the best approach for your circumstances, or want to find more information about our mortgages, speak to our advisers. We can help you identify and overcome challenges and build up your savings in a way that suits you, so you can get the keys to your own home as quickly as possible.
If you’d like to speak to a Lloyds Bank mortgage adviser, visit your local branch or phone us on 0800 783 3534. Lines open 8am-8pm Mon-Fri, 9am-2pm on Saturdays.
The Government’s Help to Buy scheme offers both practical and financial assistance.
Read our guide to understanding Mortgage Basics, from securing a mortgage promise to understanding the legal requirements.
For an indication of how much you could borrow and what your repayments could be, use our online calculator.
Our handy budgeting tool could also help you save for your deposit.