As a first time buyer you will want to take your time in making the decision to get a mortgage, researching carefully to make sure you choose the best deal and especially the right home to put your money into. While you are researching your ideal property and mortgage deal you could always be saving to ensure that you have a hefty deposit and some extra cash to keep in savings. If you look at an offset mortgage calculator you’ll see how much quicker you might be able to pay off your mortgage if you have a lot of savings as well as what you can save on interest if you make regular overpayments.
It makes sense to have as much money in savings as possible anyway, but an offset mortgage can make the process simpler and cheaper. Just compare the repayment options with those shown on a buy to let mortgage calculator or an interest only mortgage calculator (you can find a free mortgage calculator on most comparison websites and if you do an Internet search should come up with some good online options) to see what savings could do to protect you over your repayment term.
Another reason to have a lot of savings is because mortgage brokers are tightening their restrictions on mortgage lending and a lot of first time buyers are finding it difficult to get their mortgage. Lenders have always been more lenient on those with a larger deposit to put down and more accessible cash as they are a safer bet so this will help you to secure a mortgage.
When saving you should choose an account which will make you the best returns and make your saving experience that much easier. Choosing an ISA may be your best option as you do not need to pay income tax on interest earned by these accounts. If you do not want to go with an ISA and are worried about taking the money back out of your savings, you should look at a fixed rate bond which you can put money into but not take money back out of before the fixed term is over. This will ensure that when the bond matures you will have a large stash of cash to use for your first home.
Set your target to be something ambitious but reasonable and keep a check on what you are paying in and how close you are to reaching your target. If you have to underpay one month make up f or it by overpaying the following month and so on.
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