For first time buyers in Bristol, the process of purchasing a home can seem overwhelming. One of the key aspects to consider is saving for a mortgage deposit. In this article, we’ll discuss effective strategies to help you achieve your savings goal.
Work out your savings goal
To determine how much you need to save for a mortgage, start by calculating your monthly disposable income. Subtract your expenses and monthly outgoings from your monthly income to estimate the amount you can allocate towards your mortgage savings. This will allow you to set realistic goals for your monthly savings.
Typically, when obtaining a mortgage from a high street lender, you’ll need to provide at least 5% of the property’s cost as a deposit. However, some first time buyers in Bristol aim to save a minimum of 20% or more. A larger deposit can lead to lower monthly payments and access to competitive mortgage deals with lower interest rates.
Additionally, it portrays you as a less risky borrower to lenders. To determine the exact amount you’ll need to borrow for a mortgage, consult with a mortgage advisor.
It’s also important to factor in the additional costs associated with buying a property. Consider setting aside some money for insurance or cover for yourself and your property, which can be provided by a mortgage and protection advisor.
Exploring government schemes in Bristol
As a first time buyer in Bristol, you may be eligible for various government schemes designed to assist with homeownership.
One such scheme is the Shared Ownership Scheme, which allows individuals who can’t afford a mortgage on 100% of the home to purchase a share of the property (typically between 10% and 75% of the home’s value) and make up the remaining share through rent.
Over time, you have the option to buy larger shares if you can afford to. For more information on these schemes, feel free to contact us or book a free mortgage appointment with one of our expert mortgage advisors in Bristol. You can also visit the government’s OwnYourHome website for further details.
Additional sources of help
A gifted deposit from a family member can significantly help you when purchasing your first home, potentially covering some or all of the required deposit. Unlike a loan, a gifted deposit does not need to be repaid.
Reviewing your outgoings is another effective way to save for a deposit. Take a closer look at your bills and subscriptions to identify any potential areas for cost savings. You may find cheaper deals for your mobile phone and broadband packages.
Additionally, reassess leisure services such as gym memberships or streaming services to determine if you’re getting your money’s worth or if there are more affordable alternatives available. By optimising your expenses, you’ll free up more funds to save towards your deposit.
Buying with a friend or partner in Bristol
Consider purchasing a property with a friend or partner as a viable option for getting on the property ladder and saving for a deposit. Buying with another person can expedite the savings process compared to relying solely on a single income.
However, it’s important to note that if one person defaults, the other individual may become responsible for the entire mortgage. There are different types of mortgages available for those buying with a friend or partner, including Joint Tenants and Tenants in Common. These options offer varying levels of ownership and flexibility in terms of selling or giving away shares of the property.
Saving for a deposit with bad credit in Bristol
If you have bad credit, obtaining a mortgage in Bristol may still be possible, albeit with higher interest rates that may necessitate a larger deposit. In this case, it’s advisable to begin by improving your credit score. Here are some strategies to consider:
– Register on the Voter’s Roll: Being listed on the electoral roll demonstrates stability to lenders. Ensure that all information on the form is accurate, including your name and current address.
– Stay Within Your Credit Limit: Maxing out your credit card each month can negatively impact your credit score. It’s best to use a credit card and pay off the balance in full each month.
– Meet Payment Deadlines: Paying bills on time and in full showcases your responsibility as a borrower. Well-managed, older accounts can positively influence your credit score.
– Build a Credit History: Having a history of credit, such as car finances, credit cards, and bill payments, can help companies assess your creditworthiness.
– Close Unused Credit Accounts: Contact your credit card providers to close any unused accounts. While this may temporarily lower your credit score, it can prevent potential fraud.
– Separate Financial Ties: Being financially connected to a family member or ex-partner can sometimes have a negative impact on your credit score. Contact the credit reference agency to request the removal of such ties.
Our expert mortgage advisors in Bristol
We’re here to support you throughout your mortgage journey. We offer free mortgage appointments with our mortgage advisors in Bristol, which you can easily book through our website’s “Get Started” process.
During these appointments, our experts will provide the guidance you need to achieve your mortgage goals.
Remember, saving for a mortgage deposit may seem challenging, but with the right strategies and professional support, you can make your dream of owning a home in Bristol a reality.
Date Last Edited: December 11, 2023
