Saving For Your First House
The reason most first-time buyers can’t get onto the property ladder isn’t down to the fact they have bad credit records or aren’t in reasonably paid, full-time employment. Instead, it’s because a large deposit is often required to get the best deals, which makes saving for your first house a challange. Whilst it is still possible to get a mortgage with a 5% or 10% deposit, the rates will be much higher than if you were to put down a larger sum.
So, at a time when the cost of living is rising ever higher, just how can you save enough cash for a decent down payment? Brooke Steel Estates suggest the following tips:
Help to Buy: ISA
The government offers a scheme called the Help to Buy ISA. For every £200 you save, you will be given an extra £50. £200 is the most you can put in at any one time, but you can kick start the account with a £1200 investment. The most you can save in total is £12,000, at which point you’ll get a bonus of £3000 from the government.
Most high street lenders have signed up to the scheme so it’s definitely worth shopping around for the best rates. The best bit about this scheme is that unlike the Help to Buy Equity Loan scheme you are not restricted to a new-build house, you can buy whatever you like, with no ceiling on how much you can take out a mortgage for. Better still, if you’re moving with a partner then you’ll receive up to £6000 since the ISAs are per individual, not property.
Help to Buy: Equity Loan
This scheme is only available when buying a new build property. The government will lend up to 20% towards the cost of the property (you will get up to 40% in London). Therefore a mortgage of only 75 per cent of the value of the property is needed (55% in London). With the help to buy equity loan, you will only need a deposit of 5%.
Assess Your Current Finances
If you don’t have much residual income, saving your first house deposit can seem like a difficult task. Assess your monthly expenditure and see if you can make any cut backs while you are saving. Even small savings can make a difference.
Quick savings could include:
- Switching utility providers
- Buying non-branded goods in the supermarket
- Checking out supermarket ‘reduced’ sections
- Batch cooking and freezing meals
- Taking your own lunch to work
- Cycling to work rather than taking the train, bus or tube
Take on Additional Work
Freelancing in your spare time is a great way to make some extra money. There are lots of online job boards where start up companies in particular are looking for paid marketing, writing, or graphic design work which you can do from the comfort of your own home. You could even get a temporary evening or weekend job whilst you are saving. Dog walking, babysitting and evening bar work are all simple ways of making extra money to put straight into your deposit fund. They can be a great way to meet new people too.
Move Back in With Your Parents Temporarily
Returning home to live may feel like a backward step but it’s actually a very positive one. Paying a minimum rent (or no rent if you are lucky) to your parents will give you the breathing space to save towards that crucial deposit for your own place.
Saving for your first house deposit doesn’t have to be an impossible task. The government Help to Buy schemes can help you onto the property ladder and consulting a Mortgage Adviser will help you find the best deals and give you a better understanding of the options available. Saving steadily each month will help you reach your goal. Making cutbacks, taking on additional work and moving in with your parents are great ways to help save as much money as possible to put towards your deposit.