Saving for a Mortgage

With kids it can seem that the spending is endless. Nappies and what feels like buying new clothes every other week to accommodate growing little people. It can feel like you will never be able to save any money for a rainy day, let alone a mortgage.

We are in a very lucky position to be able to own our own home so I thought I would share ten little things, that can be big things, to help you to save money with a growing family and help to get on the property ladder.

1. Prioritise – I know it can be easier said than done but you really have to think about what is important. Of course there are certain necessities but there are a lot of things that aren’t. Yes, it’s lovely to be able to go on holiday and have your highlights done every month but if you are serious about saving for a mortgage, perhaps you go without for a few years. Or, once you’ve worked out how much you can set aside each month for savings, then use that for ‘fun stuff’. But it should be prioritised and if saving more is important to you, budget for your savings first.
2. Needs vs Wants – It can be so hard, when you’re out and about and see that killer pair of heels that just have to have. But, if you are serious about a mortgage, then something like that is just a want. I’m not saying never buy new shoes here, but unless you have some that are falling apart, and therefore you need new shoes, then just walk on by. This goes for things like Christmas and birthdays too. If you haven’t got enough in the budget for a ‘big’ birthday party, then simply, don’t have one. Imagine how nice it will be when you’re sat in your own home instead 🙂
3. Open a Savings Account for Your Kids – It’s a common myth that kids don’t pay tax. This isn’t true, as they are taxed in the same way as adults. This means in the tax year each child can earn up to £10,000 tax-free from savings or investments (or salary if they’re teenagers). The thing is though, unlike most adults, most children don’t use up their allowance, so their savings interest is tax-free. Make sure you shop around for the best account and you could be earning up to 4 – 6% interest.
4. Be Thrifty – there are lots of things that around the home you can be doing cheaply. I’m not talking mega-bucks here but think for example, cleaning products. Buying cleaning wipes and various different cleaners can cost several pounds a month. However, using distilled white vinegar as a surface, floor and mould cleaner, can cost less than 50p per month. Pinterest has some great links for homemade cleaners and fabric softeners. This can also go for food shopping – homemade will cost a lot less in the long run.
5. Which Type of Mortgage – there are three different kinds of mortgage so its good to know which one will work best for your family and before setting your family budget, it will determine how much you will need to save.
   1. Repayment Mortgage – you pay the interest and part of the capital off every month. At the end of the term, typically 25 years, you should manage to have paid it all off and own your home.
   2. Interest-Only Mortgage – you pay only the interest on the loan and nothing off the capital (the amount you borrowed). You will have to have a separate plan for how you will repay the original loan at the end of the mortgage term.
   3. Combination Mortgage – You can ask your lender if you can combine both options, splitting your mortgage loan between a repayment and interest-only mortgage.
6. Register to Vote – I didn’t know this until we were looking at houses our self, but even if you have a perfect credit score, if you aren’t on the electoral roll, it will pretty much be impossible to get a mortgage. Lenders use electoral roll data in identity checks so they know you are who you say you are, and live where you say you live etc.
7. Single Parent? – if you are saving and have split from a spouse or partner, your ex’s credit score can still affect yours. If you are completely split from each other then make sure you write to the credit agencies and ask for a notice of ‘disassociation’. If not, any late payments they make on a credit card for example, will reflect on you too. Shame but it’s true.
8. Check Your Credit Score – there are several free ways online to check your credit score which I think is of paramount importance. Then if there are any errors, you can have them corrected or at least have your say, which will be noted.
9. Use Free Selling Sites – there are lots of free selling sites so have a clear out of anything you don’t use anymore. Baby clothes and equipment you won’t be needing again? An old exercise bike working as a clothes horse? Get them sold. You can search on Facebook for selling sites in your town or area – I think these are great and think more and more people are using them over something like eBay. The important thing though, is to put that money aside and straight into your savings.
10. Use Childcare Vouchers – this is a tax efficient way of paying for pre-school or nursery care as it it taken from your pre-tax income. Speak to your employer about the vouchers as pretty much most companies are part of the scheme.

When you are finally looking at mortgages, ‘shop around’ for the best rates. Santander have some good mortgage options, and see what suits your family and budget best. Getting at least three ‘quotes’ is recommended, then you can choose what is the best option for you.

Good luck saving!

Rebecca x

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*Post in collaboration with Santander.