Since housing is reported to be at its most affordable for a decade, now is an excellent time for first-time buyers to climb onto the first rung of the property ladder.
For most of us, the biggest barrier to buying our first homes is the deposit. The prospect of saving so much can seem daunting, so we’ve put together some tips to help you on your way.
Speak to an expert
Your first point of call should be to discuss your plans with an expert. Whether you visit a financial planner, mortgage advisor or a savings expert in your bank, they’ll be able to discuss products and give you advice which will be most suitable for your situation.
You’ll need to provide your expert with a detailed overview of your personal finances and speaking so that they can provide you with tailored advice which suits your lifestyle, so it’s a good idea to review your expenditure before your appointment.
If you’d like us to put you in touch with an expert, follow this link.
Make a move
The cost of renting often leaves tenants with little money to save for a deposit – especially here in London. A temporary move can therefore be a key factor in achieving a sufficient deposit. More and more people are moving back in with their parents for a period of 6 to 12 months, often paying no rent and economising through saving on laundry and food costs.
If living with your parents is a truly unbearable prospect – or if they live too far away – you may need to downsize into a smaller rental property.
Make your savings work harder
While you are doing your best to reduce your outgoings, your savings shouldn’t be sitting idle – making your savings work for you should be a top priority.
If you don’t already have one, open a savings account and save what you can. Even if you think the amounts you are saving are inconsequential, they will soon amount to a worthwhile value. You should also consider opening an ISA and using your yearly cash allowance so you don’t pay unnecessary tax. The government offers an additional Help-to-Buy ISA, in which every £1 you save is topped up by 25p.
When considering these accounts, you should shop around to see which bank offers the best interest rate on your savings. Don’t just take one out with your current banking provider, as you might be able to get a better deal elsewhere, which will help you reach your goal faster.
Know your options
Various government schemes can give first-time buyers the chance to purchase a property with a much smaller deposit. This makes it much easier for you to save, since you don’t have to save as much!
If you’re looking at brand-new homes, the Help-to-Buy scheme could be of interest. This allows you to purchase a home with a deposit of just 5%, while the government or developer lends you the rest of the deposit.
Shared ownership schemes involve purchasing part of a property and then renting the rest, and although you would still need a deposit to get a mortgage for the part of the property you are buying, the deposit would be considerably lower; for example, to get a 90% mortgage on a 50% share of a £350,000 property, you would need £17,500 for the deposit.
Once you start reducing your outgoings, saving smartly, talking to an expert and considering your purchasing options, you’ll be well on your way to building your deposit. When you are ready to start looking for your first purchase, you can check out our properties for sale here.