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First time buyers! Top tips on saving for a mortgage deposit

All you first time buyers out there, investing in a property is probably the biggest purchase you’ll ever make in your life, and as someone once said, nothing worth having comes easy, so we understand that getting your money together and sorting out a deposit for a fabulous house is not always a walk in the park.

We decided to put some top tips together to help you with getting that deposit down!

(Just for the record, this isn’t legal advice or a fully comprehensive list. Below are suggestions that highlight some of the products and services that are out there for people wanting to buy a house.)

Saving that cash

Of course, the first step for saving for a mortgage is the saving part!  

“But I’m already putting money into savings what’s new?!” Well, there’s actually lots of little changes you can be making that over a year could save you extra money that could all be going into your savings account towards your home.

Food and Beverage

Research from a study conducted by Voucher Cloud suggests that 62% of employed Brits who buy their lunches are spending an average of £1,840 each year on their favourite lunch time snacks! (based on 46 working weeks) while those who bring in food from home spend £552 a year.

So, doing the maths, you could be saving over £1,300 a year by just bringing in your own stuff! It’s as simple as cooking an extra portion of your dinner each night and bringing it in the next day or making yourself some swanky looking sandwiches and salads for a quarter of the price of a trip to the sandwich shop!

Seeing where your money is going

There are plenty of handy budgeting plans available online that allow you to visualise what money is coming in and out of your bank account, you also get some pretty funky diagrams that can help you identify areas that perhaps you could cut back and save more money on.

The key to a healthy budget is to be sensible in your estimates and to factor in a certain amount of leeway to cover unexpected costs, like car repairs or having to replace household items.

You can find online budget help here.

Phone Bills

If you’re nearing the end of your phone contract, and you aren’t already, consider switching to SIM only – you can get monthly plans for a fraction of the price you’re currently paying for a handset.

If your phone is still in good nick, there’s no harm in keeping it until you’re able to resume for a handset and SIM contract.

If you really want to upgrade your phone model, there is always the option to buy a refurbished phone outright without a SIM card, and pay for a SIM only contract.

Many websites such as Argos and Mighty Deals have refurbished phones for sale that in the long run, do save you money when compared to a handset and SIM contract, despite an upfront cost.

Shopping

It sounds obvious, but it’s easy to get carried away when you go shopping! Keep yourself busy by organising other activities that are much more cost effective, walks, hikes, picnics, movie days, are all much less expensive ways of making yourself feel good.

If you really must buy something, do a hunt around online for voucher codes, or take a look at trending voucher codes you may find something that could save you money.

Additionally, many companies are desperate for your email address to try and market to you, and will offer discounts if you sign up to their newsletter. Go ahead and sign up, it’s going to save you money!

ISAS

Which leads us nicely on to our next point. If you’re putting money away, you want to make sure you’re getting as much for your money as possible in terms of interest and bonuses.

There’s a few things out there that could help you with getting a little bit extra towards a deposit.

Help to buy: ISA

Most people know about the help to buy ISA, which works like this;

You put money into an ISA account and the government gives a 25% bonus on savings of up to £12,000 (minimum amount you need to save all together is £1,600 in order to get the 25% bonus by the way)

When you first open the ISA account you can pop in a maximum of £1,200 in the first month and then £200 every month thereafter.

If you reach the maximum of £12,000 in ISA savings, you have essentially earnt £3,000 worth of bonus (for free!) from the Government.

Remember though, the house that you put the deposit down on must be a new build and the government bonus is not handed to you directly, your solicitor will sort out deducting your bonus from your final bill when the sale of the house is going through.

For full details visit the official website.

Lifetime ISA

Last year the Lifetime ISA (LISA) was introduced, and this could end up working out better for you in some circumstances.

Like the Help to Buy ISA, the LISA also allows you to earn a 25% bonus on your savings, but it can also be used towards a pension in addition to a deposit for a home.

There are also a few other differences

  • It allows you to save more than the Help to Buy ISA. You can save up to £4,000 per year and the maximum bonus you can earn is £32,000.

  • Unlike the Help to Buy ISA, the government bonus is earned annually so you can earn interest on this sum as well as your own savings.
  • You can use it to buy any home (not just new builds) worth up to £450,000 or towards your pension income after you reach 60.
  • You can pay in lump sums whereas the Help to Buy ISA only allows you to contribute monthly.

More details here.

Considered help to buy equity loan scheme?

If you’re going to really struggle getting a 10% deposit together, the help to buy equity loans can really help you out. There’s a few conditions, but they can be a brilliant option for some people.

You can use your help to buy and Lifetime ISAs towards the help to buy equity loan scheme.

The biggest advantage of this is that the Government lends you up to 20% of the cost of your newly built home, so you'll only need a 5% cash deposit and a 75% mortgage to make up the rest.

You won't be charged loan fees on the 20% loan for the first five years of owning your home. Take a look at how it works here.

Although many people look to buy their first home to live in themselves, there is also a growing number of people who are actually purchasing investment properties whilst still living at home with the parents. Now this may appear like a strange move, however this can also enable you to purchase a property whilst a tenant pays your mortgage and supplements your income. The property can then be moved in to at a later date with a element of the mortgage paid off or sold with the equity being used to purchase a property that suits your present needs… don’t forget that we are also SDL auction partners so there is even more opportunities to search for a property that matches your individual requirements

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