With the average property in the UK now costing over £200,000, saving a big enough deposit to get a good mortgage deal for your first home can seem like an impossible dream. Here are some tips that can help boost your savings.
TAKE A LONG HARD LOOK AT WHAT YOU SPEND
In order to get a mortgage, you will need to show that your finances are in good order and that you can comfortably afford the repayments. Good budgeting skills are essential. Serious savers will tell you that cutting down on trips to the coffee shop and making yourself a packed lunch are all good ways of cutting your living expenses.
KEEP CREDIT CARDS AND LOANS UNDER CONTROL
Make sure you don’t miss payments and don’t become over-reliant on your card for day-to-day living expenses. Check out the various balance transfer deals available and where appropriate move your card balance to one with a lower interest charge. With interest rates low, you might be able to get a better rate on any loans you have. Consider switching your bank account too, as many banks offer valuable cash incentives to new customers.
TAKE ADVANTAGE OF THE GOVERNMENT SAVINGS SCHEMES ON OFFER
From April 2017 savers can take advantage of the government’s latest addition to the Individual Savings Account range, the Lifetime ISA (LISA), designed to permit individuals under the age of 40 to save for a first home or for their retirement. The main attraction of a LISA is the generous bonus of 25% on offer for savers, meaning that for every £4 they save, the government will add £1.
To qualify to open a LISA, you will need to be aged between 18 and 40 in April 2017, and any savings you put in before your 50th birthday will receive the 25% bonus from the government at the end of the tax year. There is no maximum monthly contribution; savings can be as little or as much as you like up to the annual limit of £4,000. Savers need to be aware of the risks associated with a LISA, early withdrawal charges, restrictions and accessibility.
TALK TO MUM AND DAD
More and more first-time buyers are borrowing or receiving gifts of cash from their parents or grandparents. In many cases, the older generation are happy to pass on cash during their lifetime, so share your plans with them as early as possible.
MOVE BACK IN WITH MUM AND DAD
Lots of young people move back in with their parents to save on rent and help their savings grow faster.
EXPLORE WAYS OF EARNING EXTRA CASH
Sell stuff you don’t need. Be on the lookout for evening or weekend jobs that could boost your savings; from bar work to dog walking – every little helps.
GET GOOD ADVICE AS EARLY AS POSSIBLE
Talking to your mortgage adviser can help you get the right savings plan in place, and when the time comes, get the mortgage deal that’s right for you.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayment.
The information within the article is for information purposes only and does not constitute individual advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.