Pretty much everyone you talk to will require a mortgage loan to buy their first house. This is because only a small percentage of the population possess the financial capacity to pay for a house on their own. There are many things you need to know about mortgages, but the key thing I’m going to talk about is the deposit.
When you apply for a mortgage – and your application is successful – you’ll need to put down a deposit to secure the loan. Consequently, you need to ensure you have the funds available to afford this. So, here are some handy tips to help you save for your mortgage deposit:
Figure Out How Much You’ll Need To Save
The first thing to think about is how much you’ll need to save to afford your mortgage loan. In most cases, as it says on mortgageloans.co, conventional mortgages require a down payment that’s equal to 10% of the loan. So, although you won’t have to save for the full house price, this will still be a pretty substantial amount. That 10% figure is a good place to start, and it’s recommended you take a look at your maximum house price that you can afford, and save 10% of that. For example, if you’ve got a max budget of $500,000, then save $50,000 for a downpayment.
Make Monthly Deposits Into A Savings Account
Once you know how much you should save, it’s time to set up a savings account. Here, you can set up a direct debit that deposits a set amount of money into this account every month. Take a look at your personal finances and figure out how much money you need to spend each month. This includes all the bills you pay, food, etc. Then, look at the money you earn, and you should have some left over as disposable income. From this, think about how much you want to put away into your savings account. Of course, we all like to have a bit of money leftover to treat ourselves, so don’t save it all! The more you put away, the quicker you can achieve your saving goals.
Downgrade Your Belongings
Another idea is to downgrade on some of your personal belongings. The best example of this is your car. If you own an expensive car, then you can sell it and buy a much cheaper one on the used car market. Seriously, you could save thousands, maybe even tens of thousands, of dollars here. If you’re buying a house with your partner, and you both own cars, then this move alone can help you get nearly halfway to your saving goals. The same goes for other things too; if you own expensive items that you can sell and get cheaper versions, then consider it.
Hopefully, these three tips are useful to any of you that are looking to get a mortgage. In reality, if you don’t have the funds to afford a downpayment, then your application will likely be rejected!