"Money Money Money (Hub)..." How to save for a mortgage

“Oh, all the things I could do - if I had a little Money (Hub)...”

This month marks 40 years since ABBA won the Eurovision Song Contest in 1974. Since then they have sold millions of records worldwide, not to mention royalties earned from Mamma Mia!, one of the most popular stage musicals of all time.

Even if your income and assets don’t rival those of Benny and Björn, keeping track of your finances can be time-consuming. Taking control of our money can help us all to get where we want to be in life, whether you’re a Europop sensation or not.

Although it might feel like a “rich man’s world”, with a little time and planning anyone can stand a better chance of meeting their financial goals. Owning a home is a dream that many of us share, and this week we’re going to show you how you can take that all important first step onto the property ladder, with a little help from our innovative Money Hub technology and everyone’s favourite Swedish popsters.

Step 1: Can you afford a mortgage?

What’s the name of the game? It all comes down to the numbers. A mortgage is one of the most serious financial commitments you will ever make, so you need to make sure it fits into both your short-term budget and your long-term goals.

Sounds daunting? Fortunately, Money Hub allows you to see your entire financial universe in one place. You can set your monthly budget, taking into account one-off expenses as well as regular bills. This will help you to see clearly how much spare cash you have, and where you can make changes. Used alongside our mortgage calculator, the budgeting tool can help you to see whether you could afford the monthly mortgage payments.

You can also see the total value of all your savings and other assets—and how they will change over time—so you know how much you’ve got for a deposit. The Budget Calendar tool in Money Hub allows you to plan ahead, factoring mortgage setup fees and other one-off costs into your personalised plan. You should now be able to see whether you’re ready to take a chance on a mortgage, or you need to wait a little longer.

Step 2: Save enough for a deposit

Raising a deposit is the Waterloo moment for those looking to get a mortgage. The larger the percentage of the property’s value you can put down, the better the interest rate you are likely to be offered. There are two keys to this: saving as much cash as you can, and finding the best savings interest rate.

Track your goals with MoneyHub

For this reason it’s important to shop around for the best rates on your savings account, and it can be a good idea to consider using your cash ISA allowance. Alternatively, if low rates leave you crying “gimme gimme gimme some growth on my savings!” you may want to consider investing through a Stocks & Shares ISA. Just remember that this will involve exposing your savings to some risk.

However you choose to save, it’s important to keep track of your progress. You can integrate your savings and investment accounts with Money Hub, enabling you to see at a glance how much you have in your deposit fund. The Goals function allows you to set yourself a target and track your progress towards it. You can factor savings contributions into your monthly budget, helping you save more efficiently. If your circumstances change, you can easily see where you need to adjust your plan.

Step 3: What kind of mortgage do you want?

Once you’ve got your deposit together, there are some important decisions to make. There are thousands of mortgage deals on the market, and various different types to choose from. It can be helpful to narrow your search by deciding which type of mortgage you want. Voulez-vous a fixed rate, tracker, or variable mortgage? Do you want to go direct or through a broker? You can find information on the different types of mortgage, as well as compare the latest deals, in the YourWealth.co.uk Mortgages section.

Step 4: Seal the deal

You’ve done the hard work of saving up your deposit, shopping around for rates and making the important decisions. Now it’s time to make sure you pass the affordability checks and apply for your mortgage. The winner takes it all, and if you plan carefully, save efficiently and make sure you get the best deal, it could be you.

Remember to start looking around at rates again before your fixed rate expires. If you change your mind, we’re the first in line to help you find the best remortgage deal for you.

PS. How many ABBA references did you spot? Tweet us at @YourWealthUK and let us know!