Buying a home for the first time is an exciting milestone, however, saving money for a deposit is frequently a significant financial challenge. It’s essential to have an effective strategy in place to gather the funds you need given Ireland’s competitive housing market, where house prices have been rising.
According to the latest Central Statistics Office report, outside Dublin, house prices were up by 5.6% and apartment prices rose by 7.7%.
House prices in the Midlands region, including Laois, Longford, Offaly, and Westmeath, saw a notable surge of 7.8%, marking the highest increase. In contrast, the West region, which includes Galway, Mayo, and Roscommon, experienced a more moderate rise of 3.3%.
Over the 12 months leading up to December 2023, house prices in Dublin increased by 2.7%, with apartment prices also experiencing a rise of 2.6%.
Within Dublin, the most significant growth in house prices occurred in South Dublin, recording a surge of 4.3%, while Dún Laoghaire-Rathdown observed a more modest increase of 1.2%.
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Your Mortgage Deposit in Ireland
A mortgage deposit is a percentage of the property’s total value and is a significant upfront payment that potential homeowners must make when buying a property. First-time homebuyers, second-time buyers, and subsequent buyers in Ireland are required to provide a deposit of 10% of the property’s value to be eligible for a mortgage.
Considering the average price of a residential home of €327,500 (in the 12 months to December 2023), if you’re a first-time buyer, you would need to put aside €32,750 for your mortgage deposit (10%).
We understand that saving this amount of money can be a challenging hurdle for most to overcome. A well-structured plan and organised approach are essential for successfully achieving the required mortgage deposit.
What else Should I save for?
When buying a house in Ireland, it’s important to be aware of the extra costs that can go beyond the property’s purchase price. These additional expenses may include stamp duty, legal fees, valuation fees, registration fees, and potential property survey costs. Being well-informed about these extra financial commitments can help you budget effectively and make informed decisions throughout the home-buying process.
We go into more detail about the extra costs related to buying a home in Ireland in our blog post, Hidden Extra Costs When Buying a House in Ireland.
Tips to help you save for your deposit
With careful planning and saving, the necessary funds can be accumulated to secure the deposit for a mortgage. We will explore some handy tips to help you begin setting aside money for your home mortgage deposit.
1. Set your savings goals
Before you start your journey to save for a deposit, it’s important to set clear and realistic savings goals. Research the average property prices in the areas you’re interested in and determine the typical deposit percentage required by lenders. This will give you a concrete target to work towards and help you stay motivated.
2. Create a Budget
Creating a detailed budget is one of the most effective ways to save money. You need to determine how much money you can easily afford to repay your mortgage each month before you start looking at houses.
Track your income and expenses for a few months to identify where your money is going. You can take a look at your bank statements to get an idea of your monthly expenses, like rent, utility bills, groceries, transport costs, and other financial commitments such as loans, childcare, etc.
This will provide you with the information you need to decide where to cut costs and allocate more money to your savings goal.
3. Open a Dedicated Savings Account
Open a separate savings account specifically for your deposit. This account should be separate from your regular checking account to minimise the temptation to dip into your savings for other expenses.
Establish a monthly direct debit so that money transfers directly from your current account to your savings account every time you get paid. This “out of sight, out of mind” approach ensures that you consistently contribute to your savings without having to consciously make the decision each time.
You can also name this savings account something like “Home Sweet Home” or “My Dream Home” to keep you focused and motivated.
4. Reduce Unnecessary Spending
Identify areas where you can cut back on spending. This might include eating out less often, cancelling unused subscriptions, or finding more affordable alternatives for daily expenses. By making small adjustments to your spending habits, you can redirect those savings towards your deposit fund.
Start your 30-day money-saving habits challenge and witness the transformative impact of consistent, mindful money management. With each day presenting a new, practical tip, you’ll gradually cultivate a resilient savings mindset. Click here to download it for free.
5. Pay off your debts
Carrying high-interest debt can eat into your savings potential. Pay off any unpaid bills or debts, such as credit card balances or high-interest loans, as quickly as possible. This will free up more money to contribute towards your deposit.
It’s crucial to have everything in order before you apply for a mortgage from a lender because they will examine your outgoings and credit rating if you go to them for a mortgage.
Check out our blog post with the most common mistakes made by first-time buyers to avoid getting your mortgage declined. 10 First-Time Buyer Mistakes to Avoid in Ireland
6. Return home to boost savings
Even though it can seem a little extreme, returning to your parent’s home might be a strategic decision that will speed up your ability to save for a mortgage deposit. This move can significantly reduce your living expenses, allowing you to allocate a larger portion of your income towards savings.
Considering the average rent of €1,544 for new tenancies in Ireland at the start of 2023, moving back to your parents’ house could lead to significant savings for your mortgage deposit. By eliminating the rent expense, you can redirect this money towards your savings goal. This would likely accelerate your ability to accumulate the necessary funds for a mortgage deposit, bringing you closer to achieving your homeownership aspirations.
Don’t forget to take into account any possible cost savings, such as those related to utilities, groceries, or even transportation costs if the location is advantageous.
It’s important that you establish a timeline for when you expect to have the money needed for your mortgage deposit. Having a specific target date in mind helps you stay focused, motivated, and accountable throughout your savings journey.
7. Skip a Holiday
To determine the average cost of your annual holidays, add up all of the money you have spent on holidays, weekend getaways, and day trips during the past three years.
If you typically travel abroad every year, you have the option to find less expensive destinations or decrease the frequency of your trips.
Remember that every small effort you make to save brings you closer to that front door key, making all your hard work worthwhile.
8. Get professional advice with LowQuotes
Seeking advice from one of our financial advisors can help you analyse your financial situation, set realistic goals, and create a customised plan to achieve them. LowQuotes provides personalised guidance on savings strategies and investment options.
By integrating financial planning into your approach, you increase your chances of successfully saving for the deposit and achieving your dream of homeownership.
Don’t miss out on the chance to get your dream home with the help of LowQuotes. Start your journey towards homeownership today and experience the convenience of finding your perfect mortgage match in just a few clicks. Get in touch today!
All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.
Warning: You may lose your home if you do not keep your repayments.§
Warning: The cost of your monthly repayments may increase.
Warning: You may have to pay charges if you pay off a fixed-rate loan early.
Warning: If you do not meet the repayments on your loan, your account will go into arrears. This may affect your credit rating, limiting your ability to access credit in the future.
Warning: The entire amount you have borrowed will still be outstanding at the end of the interest-only period. The lender may adjust the payment rates on this housing loan from time to time. (Applies to variable-rate loans only).
