FORSYTHE FINANCIAL PLANNING

How to save for a mortgage deposit on your house

To help you learn more about how to build a deposit through investments we have set out 5 key points below. We have included a number of handy tools, videos, and calculators to get you started. If you would like to arrange a meeting to discuss your needs then why not schedule a discovery call to find out more about building a deposit for your new home?

Raising a minimum of 10% of the value of a new house (first-time buyer) is now the minimum requirement for getting on the housing ladder. The key to building up that deposit is to start saving. We have lots of handy tips and tools to get you closer to achieving your savings goal.

Unfortunately, with house prices still rising many people feel that owning their own home is beyond their immediate reach. However, with adequate planning and saving, the necessary funds can be accumulated to secure that vital deposit for a mortgage deposit. We have some handy tips and tools to get you started and saving for your home mortgage deposit.

Tip 1: Set your goal

When it comes to buying a home, the first thing to consider is the cost of the house, the deposit you will need, and how much you need to borrow from a lender for the mortgage. If you have a savings goal in mind, it will motivate you to stay focused, so decide how much you need to save to buy a house in Ireland. We have lots of tips, tools, and advice to help you budget and save for a house.

Tip 2: Decide your budget

Using our handy budget calculator will enable you to work out what your monthly income and expenses are and how much you have available to save. It will encourage you to consider areas where cost savings can be made and consequently provide funds toward building your house deposit.

Tip 3: Cut back on expenses

The key to building up that deposit (a minimum of 10% for first-time buyers) is to start saving sooner, rather than later. Are there areas where you could reduce your outgoings in order to save more? Our budget calculator will help you manage your income and expenses and motivate you to save more for your house deposit.

Tip 4: Work out how much you need to save

Our Savings calculator helps you work out how much you need to save each month to meet your goals. You can estimate the costs of matching an estimated future house deposit with the required cash sum.

Tip 5: Pay off your debts

If you have any outstanding bills or debts such as credit card bills or overdrafts, make a conscious decision to pay them off on time and in full. If you are going to a lender for your mortgage, they will look at your outgoings and credit rating, so it’s important to have all this in order before you apply for a mortgage from a lender.

How do investment plans compare to bank deposit accounts?

Some people put their savings into a regular savings or deposit account with their local bank or credit union. However, over the last decade, we’ve seen record-low interest rates, which have led to generally lower returns for money on deposits. But when you invest your money in a fund, that little extra on top can become a lot extra.

Funds are riskier investments to money on deposit in banks and so have the potential of much higher returns, but your investment could go down as well as up.

If you have money saved in a bank and have it earmarked for a future purpose, high inflation could mean that when you go to spend the money, the item that you are purchasing may be more expensive than what you put aside for it. Therefore, investing in funds is a common strategy used to ensure your money is not eroded by inflation.

Who is Regular Savings for?

Regular Savings are for people who want to save on a regular basis, ideally for 7+ years, and are suited for those saving for a significant expenditure such as a deposit for a house. We have a range of options to suit regular savers and can create a personal savings plan to suit you. You can save as little as €100 per month to potentially grow your investment. You can switch and move between a range of investment funds, subject to certain charges. You also have the option to vary the regular payments if required, and to make a once-off lump-sum injection.

What is the Help-to-Buy scheme?

The Help-to-Buy incentive, which came into effect in January 2017, is designed to help first-time buyers acquire the deposit necessary to buy a newly built home. Another goal of the scheme is to encourage developers to build more homes.

First-time buyers can currently claim a tax rebate of up to €30,000 towards the price of a new-build or self-build house or apartment. This is up from €20,000 when the scheme first came into effect.

How much can I claim under the Help-to-Buy incentive?

The maximum tax refund is 10% of the value of the property or €30,000 – whichever is LOWER. The rebate is only available on properties valued at €500,000 or less.

This means that if you purchase a property for €300,000, you can claim the maximum rebate of €30,000. But if you buy a house for €400,000, the relief will be capped at €30,000. And if you buy a home that’s over €500,000 you’ll get no relief.  

Are there any other caveats or conditions?

Yes. Here are some of the important ones.

• You must have been fully tax compliant in the four years previous to the claim. If you haven’t already done so, you’ll need to complete Form 12 (for PAYE workers) and Form 11 (for the self-employed) in respect of each of the four years. You must also pay any outstanding taxes that are due.
• The Help-to-Buy scheme is for owner-occupiers only. You can’t apply as an investor or a landlord.
• Revenue will confirm your application with the contractor that you are buying from, or your solicitor if you are building your own home. Solicitors and contractors need to be registered with Revenue for the Help-to-Buy scheme.
• If your new home is a self-build, it must be a qualifying residence and cannot be a building that was previously used, or suitable for use, as a dwelling. However, Revenue says that properties that have never been used as a dwelling and are now being converted for residential use may qualify.
• You must live in the house for at least five years after you buy or build it.

How do I apply?

You can apply online through Revenue’s MyAccount service. As long as you are tax compliant, Revenue will provide you with a summary of the maximum refund available to you within around five working days.

Where can I get more information?

For more information, contact Revenue online.

• Log into myAccount – you will need your PPS number, DOB, and password to enter
• Choose My Enquiries at the top right of the page
• Click Add New Enquiry
• Select Help-to-Buy Scheme and then First-Time Buyer (purchaser) under the inquiry dropdown boxes, then ask your question in the Enquiry Details field 

Revenue should get back to you within three working days. You will be sent an email alerting you to the fact that Revenue has responded. Simply log back into myAccount to see the answer. 

How to build a deposit

To get started take the first step and Schedule a Callback to find out more about how to build a deposit

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