A deposit is the money you put down towards the purchase of a property. This is money you have saved and does not need to be repaid as part of your mortgage.
That means that your mortgage costs less.
In addition, a deposit also acts as a powerful tool in your arsenal as a home buyer. A regular savings habit reassures lenders that you are not a risk for them to lend to.
The deposit amount you need for your mortgage
Irish lenders view deposits differently depending on what you are looking for in a mortgage.
- A 10% deposit if you are buying your first home
- A 20% deposit if you have owned a property before
- A 30% deposit if you are looking for a buy to let property
Having a sizable deposit also opens up more choice for you. And don’t forget that you also need to have funds for solicitors costs and the stamp duty on the property.
A larger deposit will ensure that you can take advantage of the best mortgage deals in the market. This means you’ll get a mortgage with the cheapest interest rates.
We will help you find the exact right mortgage for your needs.
Ways to save for a mortgage deposit
At first, knowing that you need to save for a deposit can feel overwhelming.
However, we regularly work with our customers on savings plans and they’re often surprised at how quickly money can add up with regular habits.
Some ideas that will help you save the sum you need include:
- Cut your monthly expenses by regularly comparing energy and broadband costs – and switching to better value deals
- Set up a monthly standing order to save a sum of money
- Pay off your credit card debt as quickly as possible and save the money you would usually pay towards your balance
- Review all of your borrowing and negotiate with your creditors to make sure you’re not paying more than you need to
- Move in with your friends or family to save on your rent
- Track your spending habits and make changes – small actions such as reducing takeaways go a long way to helping you save
Finally, set a savings goal for yourself. A goal that you have written down is immensely motivating. As you save each Euro, you’ll find yourself even more enthusiastic about savings because your goal will be getting closer every day.
Help from the government for your mortgage deposit
The Irish government has had a Help To Buy Scheme (HTB) in place for first time buyers for many years.
In July 2020, as a response to the pandemic, the government increased the HTB Scheme from 5% to 10% of the purchase price of your first property. This 10% value is in place until 31 December 2021.
There are conditions with the HTB Scheme. We go into detail in our blog post on how to escape the rental trap with the HTB Scheme.
The Citizens Information website also has more details.
Financial help from your family for your deposit
Some first time buyers receive financial assistance from their family members.
However, there are some rules and regulations you need to comply with to stay on the right side of Revenue.
If you are receiving money from a family member towards the deposit for your house purchase, you need a letter from the person giving you the money. This letter needs to be signed and include the following information:
- How much money is being provided
- The name of the individual giving the money
- A declaration that the money doesn’t need to be repaid
- A statement that the giver will not have any claim on the property
Revenue’s website has more information on how gains, gifts and inheritances need to be handled.
Contact us to chat about your mortgage journey. We’d help hundreds of people every week secure the exact right mortgage for their needs. And we’d love to do the same for you!