Saving a deposit to buy a house

It's starting to be more widely accepted now that you need to save a deposit in order to get a mortgage.

Some mortgage lenders could in the future ask for a 25% deposit - this would be very difficult at today's house prices.

In the old days - perhaps even only 5-10 years ago it was considered normal to have to put down a deposit of perhaps 5-10% of the cost of the house when you took out a mortgage.

This was a good idea.

Why are deposits a good idea?

It encourages you to save money.

If you can't save money then you will struggle to pay for things like repairs, emergency repairs on heating, unexpected bills and other additional expenses when you buy your own house.

If you're living day to day without being able to save a penny then you are in trouble if you want to then buy a house. Houses cost money to upkeep and it's certainly essential to keep basic facilities working, like the heating, gas servicing, replacing tiles, broken windows and other minor issues.

You should try and save money every month. If you can save a chunk of money over a few months then work out how much you could save in a year, two years, five years. Could you be saving up for a house right now?

Of course people argue that the rent they pay now will be saved when they "buy" a house, forgetting that they'll be paying a mortgage of a similar size to the rent, and that if interest rates went up they'd have to pay more every month.

Having a nest egg of cash is a good idea. Find a savings account at your local bank. Perhaps save up your change every week and see how much you put aside. Or take some money out of your current account as soon as you get paid.

If you have a coffee from a coffee shop on your way to work that's probably costing you about £2 a day - 5 days a week that's a tenner a month you're blowing on an admittedly nice cup of coffee but how much would a flask full of home brewed coffee cost you? A lot less.
Learn to make simple changes and you could be saving over £500 a year just by cutting one coffee. Think about the other ways of saving just a pound every day and you'll soon find it all adds up.

Use one of those accounts you can't take money out of without giving lengthy notice if you think you might dip into your house deposit money.

Don't be afraid of asking your bank for more than one savings account. One for your holiday and one for long term plans like buying a house.

Why not carry a notebook for a week and write down EVERY penny you spend. You'll soon find many ways of cutting back!