From getting acquainted with the Help-to-Buy scheme to claiming a tax refund, there are a few things you can do to make getting a mortgage deposit together easier.
At bonkers.ie HQ we’re well aware of the struggles renters face as they grapple with high rents while also trying to save for a mortgage deposit as many of us here are in the same situation.
So what can you do if you’re trying to get a deposit together?
Well, unfortunately there’s no magic money tree and unless you're hoping to come into an inheritance (and have some very old and sick relatives!) then hard choices lie ahead.
However there are a few things you can do and should know about to try make it easier.
1. Get acquainted with the Help-to-Buy scheme
This scheme gives a tax rebate to first-time buyers of up to €20,000 to help towards the deposit for a NEW build property. The scheme is open until December 2021 having recently been extended by the Government. See here for more info on the scheme and how to apply.
2. Look into a mortgage ‘exemption’
The Central Bank’s mortgage lending rules require you to save a deposit of at least 10% of your house price, which is easier said than done with rent prices as high as they are. However in any one calendar year, 5% of mortgages to first-time buyers can have a deposit below 10%, provided you meet other lending criteria of course. So chat to your bank about the possibility of getting a mortgage deposit exemption.
3. Consider mortgage cashback deals
Most banks at the moment offer generous mortgage cashback deals to first-time buyers. And while the rates on these deals tend to be higher, meaning you pay back more over the longer term, there’s a lot to be said for getting a cash lump sum within a few weeks of drawing down your mortgage. Plus, you can always switch to a cheaper non-cashback deal after a few years.
And anecdotally we know that a lot of people use these deals to pay back the ‘bank of mum and dad’ after they’ve moved into their new home. So if you’re lucky enough to have a parent, relative or sibling who can lend you some money towards a house deposit for a short amount of time, a cashback offer can be an easy way to pay them back. In many cases a bank will lodge your cashback within days of you drawing down your mortgage.
4. Get more money savvy
Get up to speed on how to spend your money more wisely and watch the pennies accumulate. Every little helps to borrow a phrase.
Saving just €25 a week on your outgoings by being more money savvy will add up to over a grand by the end of the year. And by making sure you're not overpaying on your household bills you'll save even more. For example, switching energy supplier will save you close to €400 a year and only takes minutes to do online on bonkers.ie.
5. Claim a tax refund
According to the main independent providers of tax refund services in Ireland, the average refund for anyone who looks into their tax affairs is in the region of €900-€1,100. A refund like this won't by itself help you get your deposit together but it all adds up and it’s better that the money is in your pocket as opposed to the Government’s!
As well as applying for a tax refund, see here for a list of 10 ways to pay less tax and save you even more money.
OK, an obvious choice, and we can see you rolling your eyes right now. But hear us out!
Every journey starts with the first step as they say. And whilst the task of saving for a deposit might seem insurmountable at times, even putting away just €50 a week would add up to €2,600 at the end of one year (€5,200 if you’re a couple and both saving) and that’s before you earn any interest.
Plus, being able to show a regular savings habit, however small, is a really important part of the mortgage application process as it helps demonstrate to your bank that you’re able to manage your money and afford a monthly mortgage repayment. Because even if you magically got gifted your entire mortgage deposit you'd still have almost no chance of getting a mortgage for the rest of the amount unless you can demonstrate some type of savings habit. So head over to our savings comparison page to check out all the savings options available right now.
Setting up a direct debit or standing order and paying into your savings account just after payday is the best way to go and means you're less likely to miss the money.
What do you think?
Are you a renter who's struggling to save a deposit for your new home? Do you think you'll ever be able to afford your own place? And do you have any other tips on saving towards a deposit?
Get in touch and let us know!