Colette Sexton, news correspondent at The Sunday Business Post, on why saving for a house deposit is difficult but not impossible.
The news has been particularly bleak in recent months for those who dream of owning their own home, with grim reapers out there claiming that the current generation of 20-somethings and 30-somethings will be forced to rent forever. It is easy to get bogged down in the negativity but instead of listening to the naysayers, take action.
The first step in buying your own home, whether you are planning to do so with a partner or flying solo, is to work out how much you spend every month and what you spend it on. Horrified at your bills? There are some great websites like switcher.ie and bonkers.ie that will show you the best prices out there for electricity, broadband, phone and so on. You could end up saving hundreds of euro every year by switching provider, and do not be afraid to call up your current providers and ask them for a better deal – you’ll be surprised what they will offer to keep your business.
Once you have worked out how much you can save every month, set up a savings account and a direct debit to instantly transfer your savings once your salary comes in. When selecting a savings account, it is best to pick one that is in a separate bank to your current account as that requires you to go to the effort of finding the appropriate mini calculator and various account details before you can access the savings. If you have instant access to your savings through an app on your phone it makes it far too easy to sneak a few quid out if you are having a weak moment or see a particularly nice pair of shoes.
In Ireland, first-time buyers must have a deposit of 10 per cent of the value of the property they wish to purchase to secure a mortgage. The amount you can save may not be huge, and it is likely that it will take years to save enough for a deposit but those years will pass faster than you realise. The main thing is to start, and to start immediately.
If you are paying rent, it is vital that your rent payments are marked clearly on your bank statements. Likewise, you should try to wean yourself off credit card and overdraft use. If you have a loan, make sure you always make the repayments on time. When it comes to applying for a mortgage you will have to demonstrate that you are responsible with your money.
It is a long, hard slog saving for a deposit, but despite what some economic commentators might have you believe for most people it is not impossible. It might take longer than you anticipated but the feeling of turning a key in your own home will be worth it in the end.