Buying a home is a major life decision and so requires a lot of planning. But just how long does it take to save money for a deposit for a mortgage?
 
Darren-NolanDarren Nolan, Head of Financial Planning with askpaul and Pax Financial, told the Irish Mirror how you should go about saving for a mortgage and how long you can expect for it to take.
 
Asked what age people should ideally begin saving, Mr Nolan said: "Without being generic, the earlier you can save, the faster you will achieve your savings target. But it can be very difficult for a person in their early 20s to make big life decisions as to where they are potentially going to live for the rest of their life.”
 
Mr Nolan said that the average age of a first-time buyer has increased significantly in recent years.
 
He said: "Over the past two decades, people in their mid-20s were securing mortgages and buying their first home. That's now shifted to an average age of 34 for a first-time buyer due to high demand and short supply. Combining this nationwide challenge with the high cost of living, people need to be mortgage planning anywhere from 3-5 years to ensure they have the required mortgage deposit amount and adequate income levels to support their mortgage request. For first time buyers, the mortgage deposit requirement is 10% of the property value while for second time buyers, the mortgage deposit requirement is 20% of the property value.
 
"It is vitally important for people to have a balance between living a life while saving in the mortgage planning journey. Some people will be able to achieve their savings goal in a shorter period where additional sacrifices can be made such as moving back into your parent’s home to accelerate the savings pot.”
 
The time it takes to save for a mortgage really depends on the person's income, outgoings, and lifestyle choices.
 
Mr Nolan said: "Some people can achieve their mortgage deposit target within 12 months because they're on high-level incomes. However, for those earning between €30,000 - €40,000 per annum, this may take several years. There are many variables to every set of circumstances that dictate a person’s ability to save such as the level of rent, total weekly/monthly outgoings, and number of dependent children. Unfortunately, life in Ireland can be expensive and as such surplus income can be scarce for some families which makes it even more difficult to get onto the property ladder.
 
"Some people might have €2,000 a month surplus. Others will have €400."
 
The amount of surplus money left over at the end of the month makes all the difference when you are trying to save for a mortgage.
 
Mr Nolan said: "Someone who has €2,000 a month surplus could most likely be mortgage ready within 12 months. Whereas someone who has a €400 a month surplus could take up to 5 years or longer in some cases to reach their mortgage deposit target. There is financial assistance in the form of the Help to Buy (HTB) scheme which has benefitted a lot of first-time buyers by topping up their deposit; however, this is restricted to new build developments and self-builds.

 The HTB scheme is available to first-time buyers which can provide financial assistance towards a mortgage deposit of up to 10% of the property market value subject to a maximum of €30,000. For example, the deposit for a property valued at €400,000 is €40,000 of which the HTB could provide €30,000 meaning a person is required to make up the shortfall of €10,000. Unfortunately, not a lot of people are aware of how the government incentives work, and hence why people should get mortgage advice as early in the process as possible.”
 
Moving back into your parents’ home rent-free can accelerate the process by eliminating expenditure on rent.
 
Mr Nolan said: "Unfortunately, the way the Irish economy is now, moving back in with your parents for 1-2 years has to be considered; albeit this is not an option for everyone.
 
"I've a lot of clients who are currently on that journey, moving back in with their parents for the short-term, to save what they were paying on rent.
 
"The rent was between €1,500-€2,000 a month, which is now directed into their savings. Over 1–2 years, the mortgage deposit can be achieved. Short-term pain for long-term gain."
 
Mr Nolan advised that if people want to start saving, they need to become more aware of their spending and acknowledge their financial situation.
 
He said: "We conduct thousands of financial plans each year for our clients and the first part of the process is acknowledging and understanding the financial position of each client. From here, a financial planning journey is created.
 
"Regardless of who I'm speaking to, whether they're aged 25 or 45, there has to be an acknowledgement of where they are in financial terms.
 
"Once you know where you are, you can then put the plan in place.”