Five ways to save for a 5% deposit

Five ways to save for a 5% deposit

Return of the 95% mortgage 

We don’t have to tell you just how hard it can be saving for your first house. In fact, according to Finder, the average age for a first time buyer in the UK is 34 and the average deposit as of January 2021, according to Halifax, is a whopping £57,000. 

However, before you start worrying, Rishi Sunak has recently unveiled details of a new mortgage scheme to help those with just a 5% deposit get accepted for a mortgage, with the Government backing part of the loan. 

Under this new scheme, first-time buyers, home movers and previous homeowners with a 5% deposit will once again have access to 95% loan-to-value (LTV) mortgages (meaning the loan is for 95% of the property’s value). Any lender that is taking part in the scheme will have to offer a five-year fixed mortgage as part of their range of 95% LTV products. Since the onset of coronavirus, 95% mortgages have all but disappeared from the market – leaving many potential homeowners stranded. This scheme is therefore designed to encourage more lenders to re-enter the 95% market. 

Five ways to save 

So, if you like the sound of a 5% deposit, how can you save for one? Well, here are our five top tips to help you do just that: 

1. Give yourself a financial health check – Work out how much is coming in and what’s going out. If you have any outstanding debts, find out which re-payments have the highest interest rate and make paying these off a priority. Once you’ve eliminated expensive debts, you can get saving. 

2. Move money into savings before you get a chance to spend – Moving the money out of your account as soon as possible to remove any temptation is good idea. Set up a regular payment so that money is automatically transferred into savings – that way you won’t forget or be tempted to spend it! 

3. Stay motivated – When it’s a big saving target, it can be easy to lose motivation, as more immediate temptations cross your path. You may be able to set a specific savings goal, such as saving for a home, within your banking app. 

4. See what you could cut from your monthly spending – Small tweaks make big impacts. Consider cancelling subscriptions you’re hardly using and planning your meals in advance could also help cut supermarket bills. Costly gym memberships that aren’t being used should be cancelled. 

5. Be patient – It may not seem like it straight away, but little changes will add up over time and make a big difference. Stick with it! 

Deposits vary across the UK 

Of course, a 5% deposit will not be the same in every part of the country – in fact they vary hugely. According to Barclays’ calculations, a 5% deposit in Northern Ireland might be around £7,391; around £8,784 in North England; £8,985 in Scotland; £8,999 in Wales; £9,250 in Yorkshire and the Humber, and £9,805 in North West England. 

The tough economy has meant saving for a house deposit has been particularly hard over the past year. There’s also been evidence that the financial fallout from the coronavirus crisis has hit younger adults – who are often aspiring first-time buyers – particularly hard. 

Added bonus for first time buyers 

It’s also worth remembering that first time buyers will still be able enjoy a zero-rate £500,000 threshold even after the new SDLT holiday reaches its deadline in June 2021. Great news for anyone who is still looking to get their foot on the property ladder but hasn’t yet managed to. 

Here at Mortgagez, our team of fully qualified mortgage advisers is on hand to help you every step of the way in obtaining a new mortgage and our service won’t cost you a penny when you go via our online portal. Visit our website today and obtain a quick quote to see how much you could save on your next mortgage. 

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PLEASE NOTE: Article written 12th April 2021. Information contained within this article is likely to change and therefore should not be relied upon or form part of any form of decision making without seeking professional advice. * 


Any guidance and/or advice contained within this document is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. Any technical or regulatory information contained within this document was correct at the time of producing it but as it may be subject to change it should not be exclusively relied upon when making a financial decision. The Financial Conduct Authority does not regulate advice on Buy to Let mortgages.  

Article written: April 2021                                                                                                            060121 MZ000189

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