
When Should I Start Saving for a Deposit?
If you are thinking that you would like to buy a home then you may wonder when you should start to save up for the deposit. This is because you will need to put a down payment on a home in most cases before you are allowed a mortgage. This is used to not only show that you are capable of managing your money but so that if the price of the home goes down the mortgage will not be higher than the value of the home.
As a child
It is worth parents encouraging their children to start saving up as soon
as possible. Not necessarily with buying a home in mind but teaching them how
to save up their money for the future. It can be very satisfying saving up and
waiting to buy something so that you know that you have paid for it yourself.
Learning to wait for something is a great thing to do and also knowing that
feeling of being able to eventually get something that you have always wanted.
If they get big chunks of money, perhaps if they are lucky enough to get an
inheritance, for example, then it is wise to show them how to put that money
away safely to earn interest or gain in value until they need it when they are
older. Discouraging them from spending money as soon as they get it and making
sure that they have a savings account are really good ways to start to help
them.
As a young adult
As they get older then parents have less of an influence and it is more up to the person to make their own mind up about money. It can be difficult to save money but is something which really should be started right away. Once you start earning you tend not to have that much money and it can be a great novelty having regular money to be able to spend on things. However, this is the time when you need to start being really careful. Regularly putting money into a savings account can be a great way to save for different things. Having a lump sum of money can be handy for emergencies, such as car repairs, replacing a broken fridge and paying unexpected bills. However, it is best to try hard not to spend the money if you can as the more that you can accumulate the better.
As someone about to
buy a home
Hopefully if you are about to buy a home you will be getting all excited
about buying something and thinking hard about what you can afford. At this
stage you will be much more motivated to save up and concentrate all your
efforts on the home. This might mean that you will be happy to go without other
things so that you can put more money towards the home. You will need to be
thinking about what else you need to spend money on as well as the deposit
though. You will need to pay removal fees, solicitors’ costs and for any
repairs or decoration that needs doing in the house that you buy. Even if you
buy a place which looks perfectly well decorated there will always be things
that you need to buy such as curtains, lightshades, lamps and you may also want
things like rugs, pictures and furniture to fit in with the new home. There
seems to always be more things that need buying than you might think and so it
is a good idea to keep some money in reserve for that as well as putting as
much as you can aside towards the deposit.
So as you can see you are never too young to
start thinking about saving. Getting together a large deposit can be a really
useful thing when you are buying a home. Not only can it mean that you might be
able to buy a bigger home or one in a nicer area compared with what you might
be able to get with a smaller deposit but you will also be able to get a
smaller mortgage. This means that you will either be in debt for less time or
you will be able to have smaller and more manageable repayments each month. You
may even find that you will have more choice of lenders or be able to get better
interest rates as you have a nice large amount of money to put down which means
that lenders will have more trust in you and see you as less of a risk to lend
to. So, there are many advantages to having a large deposit and by starting
saving as early as you can, you will have a better chance of getting together a
large deposit before you buy your first home.