Congratulations! You’ve made the decision to save for your deposit for a mortgage.
In many ways, you’re over the biggest hurdle already. There’s great power in getting your mindset in a strong place for the road ahead. Deciding to save for a deposit immediately provides you with the momentum to make a plan and reach your goal.
The importance of a deposit for a mortgage
Deposits play two key roles when it comes to securing a mortgage for your dream property.
Firstly, saving diligently for a deposit will contribute to you having a strong mortgage application. Lenders are bound by rules and regulations set forth by the Central Bank to ensure that they are responsible when providing finance to people.
Therefore, any lender has to thoroughly scrutinise your mortgage application to make sure that they do not provide you with a mortgage you can’t afford.
How you manage your finances will help them come to a decision. Seeing you save regularly will reassure them that you are capable of paying back a mortgage.
Secondly, the more money you save as your deposit the less finance you will need to borrow from a lender. This makes repayments much easier for you once you commit to a mortgage.
Set a goal for your deposit savings
We see it frequently with the customers we partner with on their mortgage journeys.
Setting a savings goal and writing it down helps you achieve what you want.
Once you have a goal in place, you’ll come up with a plan to reach it. And then take actions to put your plans in place.
Give yourself time, but don’t waste a minute when it comes to saving your deposit.
We often suggest to our customers to use our mortgage calculators to begin their mortgage journey. Once you know how much of a mortgage you qualify for and what your monthly repayments will be, you’ll also have a clearer idea of how much you should save for a deposit.
Next, open a separate savings account for the money you are putting towards your deposit. Having this dedicated account will reinforce your mindset to keep savings and it’ll keep the money out of temptation’s way to spend it.
Your savings plan in your deposit strategy
Buying yourself a treat here and there is a nice thing to do for yourself. And we’re all about self-care!
At the same time, it is important to be realistic about what you are spending your money on throughout the month.
So, your first step when it comes to creating a savings plan that you can stick to is to track your spending. On everything.
That coffee you buy every morning. Your weekly grocery shop. Gym membership. Your monthly outgoings (e.g. rent, electricity, mobile phone). What you spend on clothes. Takeaways etc.
Whatever you spend money on, no matter how small the sum, you track.
Once you have these figures in front of you, go through them carefully. These numbers have a lot of information to share with you.
You should now be able to see quickly and accurately where you are spending your income every month.
Some of these bills may be non-negotiable, such as your mobile phone contract. However, you will also have a lot of room to reduce some of your spending in some areas and this is where the magic lies.
Set up a date with your money every week. This will help you keep track of where you are spending, where you could be saving and help you reach your deposit goal faster.
Every Euro you save makes a difference
We began this post by mentioning your mindset to save for a deposit for a reason.
When it comes to saving for a deposit, many people can feel demotivated by the cuts they perceive they’re being asked to make. No more coffees, day trips or splurges in their favourite clothing stores!
Viewing saving for a deposit through that lens will make your mortgage journey a drudgery.
When, in actual fact, this could be a really exciting and empowering time in your life.
Our customers are often stunned by the savings they make by:
- Reducing their takeaways to once or twice a month rather than more frequently
- Eating out less (the pandemic has made this more difficult recently, but it’s still one of the most powerful ways to save)
- Creating a grocery list each month or week and sticking to it
- Earning extra money in creative ways, e.g. dog walking
- Walking to places close by instead of taking the car and saving on petrol
- Spending some time negotiating better deals for utilities
- Paying off credit card debt and loans
These are just a few of the ways we have seen our customers save money.
Once you get into a savings habit, you’ll find yourself more and more motivated to keep going. These are strong financial strategies to keep with you for the rest of your life.
Please contact us if you’d like to discuss your mortgage journey. We’d be delighted to chat with you.