June was the busiest month to date for mortgage applications in the UK, with more people opening a Lifetime ISA between April to June this year than during the same period last year.
This indicates that the cost of living crisis may not actually be deterring people from becoming prospective homeowners, and instead forcing them to really consider their position as renters.
Once a house deposit has been secured, you must then find the best mortgage lender, best product as well as the best rate for yourself – this takes a lot of administration, time and preparation.
Saving for a Deposit
Disposable incomes are under an immense amount of pressure at the moment, with all costs including utility bills, fuel and rent on the rise.
While it may seem incredibly challenging to save at this time, first time prospective homeowners should take advantage of the UK Government’s Lifetime ISA scheme. This offers those who are saving for their first home a onus of up to £1,00 each year to top up their deposit.
Those aged between 18 to 39 can save up to a maximum of £4,00 per year, and this will then be topped up by the government by up to 25%.
Seek Out the Best Mortgage Deal
It is likely that mortgage lenders will be taking the rising costs of living into account when conducting their affordability calculations on prospective homeowners. As such, it is worth being diligent in managing your spending and finances for at least six months before putting forward a mortgage application. This is because it will show the lender that you have some flexibility in your budget to account for absorbing rising costs.
Further, when considering which mortgage to pursue, you should understand the offerings. With a fixed-rate mortgage, your monthly repayments will be the same each month. Alternatively, with variable-rate mortgage loans, your monthly repayments could fluctuate depending on changing interest rates.
If you are looking to buy a home, it is worth consulting a trusted mortgage broker so that you can prepare your finances according to the steps leading to the application process. The broker can then offer guidance in finding you the best mortgage deal – one that has low interest rates and that you will be able to afford to repay.
Try to Cut Down Current Household Costs
Where possible, try to cut down on your gas and utility bills. Find more information on how to save money on your energy bills. Overall, this will massively help to reduce your outgoings, which can instead be used to save towards a housing deposit.
This could involve making small changes, such as hanging clothes out to try in the garden or on a clothes airer instead of using a tumble dryer. Further, cold washing your clothes can also help to save money instead of using electricity for a hot wash.
In addition, charging your devices for a few hours a day instead of overnight, changing your light bulbs to LEDs, and unplugging unused appliances such as kettles and microwaves can all contribute towards lowering your utility bills, helping you to save a little bit more.