If you’re thinking about getting a mortgage, then there are many things you need to keep in mind. Getting a mortgage is not always easy – and it shouldn’t be, because it’s probably one of the most important decisions you’ll ever make in your life. As a matter of fact, the kind of mortgage you get is most likely to affect your lifestyle more than anything else for the next few decades. One of the best ways to ensure you get a good deal is to ensure you have a good deposit to put down. How do you do this? There are several ways. Here is the best advice on building up your deposit for a mortgage.
Why is your deposit important?
Your deposit is important for two reasons. First of all, the bigger your deposit is, the less the mortgage lender has to help you, so that’s a serious plus-point. Furthermore, with a high deposit, you show the mortgage lender that you are serious about your investment and this gives them more confidence in you.
Secondly, the higher your deposit, the more flexibility you’re likely to get when it comes to interest rates, and this can seriously affect the amount you pay back every month, and for how long.
Start saving early
There’s no secret to this – the earlier you start saving, the better your chances are at accumulating a good amount later on. Similarly, the more you can put aside every month, the higher your savings will be after a while. It’s common sense and it requires a lot of work and, perhaps more importantly, financial wisdom and discipline. Trust that it’s worth it; do the numbers, you won’t regret it.
What lenders usually require
Most lenders will require you to put down a deposit of 5%. If you are able to do better than that, then the lender will be more flexible; for example, with a 10% deposit, you are most likely to get cheaper deals.
Savings in the short-term
If you feel you may need the money you put aside in the short term (say, within a year), you’re best off with a savings account.
Savings in the long-term
If you want to save money in the long term, talk to your bank – they may have favorable deals for deposits that don’t have to be touched for a few years.
If you feel you need more of a deposit in order to take on a mortgage – in other words, if you feel you need more time to set money aside – then it’s usually advisable to put that money into a low-risk, higher investment programme. Beware of the risk, however – be wise, and consult the experts, such as a trusted and experienced mortgage advisor Bristol offers, such as those at Open Vision Finance.