Mouthy Money’s latest post from Finance Dee offers you insight into how she saved for her own house deposit in 18 months without giving up her morning latte.

All of the articles I read about how long it takes to save for a house deposit makes it seem like a completely unachievable aim for most people.

Depending on whose research you read, it can take anything from 3-4 years to more than 15 years to come up with the money required to buy your first home.

However, I am living proof that you can save for a house deposit much quicker than that – in 18 months in fact – by following a few simple hints and tricks.

First and foremost, I want to say that the ‘classic’ advice to drop the morning latte if you want to save for a house deposit is nonsense. I bought myself many coffees during the house saving process, and whether I did or didn’t wouldn’t have really had an impact on the process.

That aside, there were a few different things I did which helped me to save up fairly quickly. I hope this will give you some ideas or encouragement on your journey.

Make use of a Lifetime ISA (LISA)

I find that Lifetime ISAs often don’t get enough air time, but they are wonderful products to help first-time buyers get on the property ladder.

It is a savings product that allows savers to deposit up to £4,000 a year. The government will then top it up with a 25% bonus up to a maximum of £1,000 per tax year.

For me personally, this scheme topped up my house deposit by £3,000 as both my husband and I made use of LISAs.

The good thing with these products is that if you aren’t a first-time buyer you can still get the government bonus but the funds (your money and the Government bonus) can only be accessed once reaching the age of 60.

If you decide to take your money out before 60, you will lose the government bonus but can still get the money you put in back in your pocket.

Speak to a mortgage broker

Initially, we planned to save for a 10% deposit, which is generally standard for a house deposit.

However, after speaking to a mortgage adviser we were made aware of 95% loan-to-value mortgages which only require a 5% deposit.

That said, there are some downsides to these mortgages. For example, they often come with higher interest rates and you’re at greater risk of falling into negative equity, which is when your home is worth less than the mortgage attached to it.

However, it did mean we could get on the property ladder sooner rather than later, and so the pros outweighed the cons for us.

Speaking with a mortgage broker highlighted to me that the process of saving for a house deposit and buying a home isn’t linear.

It’s different for all people, and speaking to a good mortgage broker can be helpful to weigh up all your options.

House share & family living

Now not everyone will have the ability to live with family, but this is a fantastic way to save for a house deposit quicker.

Rent is one of the largest expenses for most people, so if you’re able to cut that cost down it can really help expedite the saving process.

Another great option is to live in a house share and rent a room . This again may not be the most ideal of situations, but when looking at the bigger picture you may find it is worth sacrificing your own space for a couple of years in order to boost your savings.

I kind of did both – house share and living with family. Truthfully, I did really want a space of my own to put my personal stamp on, and I didn’t really enjoy the feeling of living in someone else’s space. But this undoubtedly moved the process along a lot quicker than if I rented a place of my own.

Be clear on your spending priorities

If you have been following me for a while, you will know I love a budget. And what I did over those 18 months was to prioritise what I wanted to spend my money on.

I barely bought any clothes or shoes, as I felt I had enough. That wasn’t a priority for me, so I didn’t budget for it.

However, travelling was and is a priority. But I did so on a budget. So I either went to places where I didn’t have to pay for accommodation, like Florida, where my family and friends live, or on cheap European holidays.

In short, you don’t have to deprive yourself of the things you want to do, but just give a little thought to how you can save money while you do those things.

If you want to know a bit more about the other things I did, check out my YouTube video here.

Photo by James Feaver on Unsplash

The post How I saved for a house deposit in 18 months appeared first on Mouthy Money.

Mouthy Money Your Questions Answered panelist Karina Hutchins answers a reader’s question about being able to get extra cash in their mortgage above the house value to conduct renovations.

Question: My partner and I are first-time buyers nearly ready to buy a house. We can afford something around £200,000 with our deposit but we’ve seen a house that needs some work, but has a lot of potential, for £180,000. Would we be able to ask the bank for extra cash in our mortgage above the house value to conduct renovations? We don’t have the extra funds ourselves to do the work that is required.

Answer: Before the financial crisis of 2008, it was common to find mortgage loans up to 120% of the value of your home.

However, this level of debt left people in negative equity (where you have more debt than your house is worth) meaning they became mortgage prisoners, as without equity, they couldn’t afford to sell their home or change their mortgage deal. As such, mortgages above 95% of the value of your home are no longer available.

I would see if it’s possible to buy with a 5% deposit and use whatever funds you have left over to start renovations.

If you require further funds, you can wait six months after the mortgage starts to apply back to your lender for a further advance. They will revalue your home and maybe you will be able to withdraw further funds if you’ve created more equity.

This could work well as house prices have naturally increased by 10-15% over the last 12 months and you can look to improve the property as much as possible with the deposit money you held onto.

YOUNG MONEY: If you’re 18 – 29, we want to hear from you! By taking our quick survey, you’ll be in with a chance of winning a £100 shopping voucher from your choice of Amazon, John Lewis or M&S – plus four £20 vouchers up for grabs too.

Alternatively, you should look to save funds or seek affordable borrowing elsewhere which isn’t secured against your home. If you do take out new debts, please ensure you can afford the repayments in additional to your mortgage and other outgoings.

Karina Hutchins is Head of Mortgages at Open Money

Have you got a burning money question? Ask your question here

Photo by Annie Gray on Unsplash

The post Can we ask for extra mortgage cash to renovate our new house? appeared first on Mouthy Money.