Get mortgage ready with a savings plan

2021-07-21

As a mortgage broker in Dublin, we help hundreds of people from around the country successfully qualify for mortgages every month.

And today we’d like to help you!

We’re sharing the eight strategies we encourage our customers to follow to put their best foot forward when applying for a mortgage.

➡️ No, it’s not necessarily a quick process.

➡️ Yes, qualifying for a mortgage can be done if you’re willing to focus and go through the process methodically.

Saving for a 10% deposit as a first-time buyer

First-time buyers need a 10% deposit to buy their first home in Ireland.

Depending on the cost of a house or apartment, that can be anywhere from €25,000 and more.

This can seem overwhelming, but we see evidence everyday of people saving the money they need for their mortgage deposit.

It takes commitment and creativity. However, we can promise you, once you get your mindset right to save your deposit you’ll find the rest has its own momentum.

Strategy 1: Get rid of your debt

Your first step as you put together your savings plan is to clear all of your outstanding debt.

If this is not immediately possible, work on reducing your debt as best you can. Every Euro that you are not paying to debt is money that can be saved towards your deposit.

The debt that you have, especially if it is a credit card, is costing you a lot of money in interest every month. This is a problem as the interest you are paying is stealing money you could be saving.

Some people advocate paying off your debt with the highest interest rate first. Others suggest starting off with the smallest debt you have and paying that off first to create momentum.

We’ve seen both approaches work.

Find the one that works for you and begin tackling your debt. Often, listing all your debts and setting a deadline for when each one will be paid off will provide you with a boost of encouragement to get the job done.

Strategy 2: Open a separate savings account

As you begin saving money towards your deposit, you want to keep it separate to the rest of your finances.

It’s important to keep your deposit funds in their own account to watch them grow. You want to support yourself in as many ways as possible as you commit to saving your deposit. Watching your money grow is one of those ways.

You also want to make the money a little difficult to get to in order to resist temptation.

Strategy 3: Track your spending

This is often the superpower strategy in the whole bundle we are recommending for you.

Tracking what you spend is a necessary part of understanding where your money goes.

With the best intentions in the world, you are not going to remember every purchase you make in a month. And that is one of the reasons why it is easy to overspend.

You can also only manage what you measure.

Without understanding where you are spending your money every month, you won’t be able to make the strongest moves to start saving instead.

You can track your spending using a finance app, or use good old pen and paper.

Either way, don’t skip this step.

It is critical.

Strategy 4: Shop around for better value utility suppliers

One of the biggest ways you can save money is by shopping around for the most affordable gas and electricity suppliers.

Plenty of comparison sites show that an individual can save up to €410 a year when they switch to the lowest rate provider of a utility.

Check out your broadband package too. There could be huge savings to be made here.

We’ve seen customers save hundreds of Euro per year just by switching their suppliers.

That’s extra money in their pocket for an hour or two of effort. Major win!

Strategy 5: Plan your meals

Ireland has a big problem with food waste.

The government has some sobering numbers to share that shows just how much food we are wasting per year and it comes to between €400 to €1,000 per year.

That is a lot of money!

It’s easy to see how this money is being wasted.

How many times don’t you cook a whole bag of pasta instead of getting out scales to measure exactly how much you need. Or you buy bread and let it go stale, so you throw it out.

Every time you throw food away, you are throwing money in the bin.

Meal planning is a smart way to reduce food waste. And it’s easy to do:

Plan a weekly menu of meals
Check the ingredients you already have in your fridge and cupboards
Make a shopping list
Stick to this list when you go to the store

Strategy 6: Treat yourself within reason

On the topic of food, take-outs and eating out also need to be examined.

Every person enjoys a treat and you’re welcome to still treat yourself while you are saving for a deposit. However, if you’re truly committed to saving as much money as possible as quickly as you can then you need to be honest about your take-out and eating out habits.

If you’re having take-out once a week, reduce that to once a month and see how your savings add up.

Likewise for takeaway coffees. A coffee a day adds up quickly in your budget. Treat yourself to a takeaway coffee a week - and watch that deposit grow!

Strategy 7: Get your mindset right

Your mindset is going to be your biggest asset - or your biggest hindrance - when it comes to saving for your deposit.

One of the things you need to get a handle on is your understanding of why you are making these changes to your monthly budget. You are saving for a big goal - and it is a rewarding one.

You don’t need to treat the period in which you are making these savings as one completely devoid of fun and entertainment.

But FOMO (fear of missing out) can cost you big time.

This is where clarity on your goal can help you override any doubts you may have about declining a few social engagements.

Set yourself a budget for how much you can spend each month on going out. Once you know exactly what you have to spend on going out, you’ll be laser focused on what you do with that money.

Strategy 8: Acknowledge your wins every step of the way

Our customers are often amazed at how quickly their savings add up.

That said, it’s unlikely that you’ll save the 10% figure you need in just a few months.

So understand that you’re in for a medium-term experience as you get your finances in tip top shape. There are many steps to the deposit process and you are already moving forward by creating a savings plan for yourself.

You’ll be winning by:

Paying off your debt
Creating a meal plan
Opening up a separate bank account
Finding better deals on your utilities
Reducing your food waste
Tracking how you spend your money
And in so many other ways!

Acknowledge these wins and keep going. You’ll reach your goal quicker than you think.

We’d be delighted to chat!