There are many reasons why saving for a deposit is harder than ever before. The rising cost of living, covid, and Brexit have all negatively impacted. However, getting your foot on the property ladder is not an impossible dream. Here are some tips on saving for a mortgage deposit.
Use the LISA if you qualify
If you’re a first-time buyer aged between 18 and 39, you are eligible to open a Lifetime ISA account. You can pay up to £4,000 each tax year into the account. The government then adds a 25% bonus (£1,000 maximum). You must use your LISA towards purchasing your first home or to fund your retirement. Under current rules, you can have a LISA and a regular ISA. This means that your savings and/or investments will get even more protection from tax. For investments, we act as introducers only.
See if you qualify for further help
Central government has various schemes to help would-be housing buyers, especially first-time buyers. Local authorities may also have their own schemes. Check availability and eligibility in the location where you want to buy.
Be flexible about your exact location
Many buyers only consider homes within reasonable commuting distance of their place of work. However, it can be beneficial to keep your options open and consider what is ‘reasonable’.
What “reasonable” means in practice depends partly on your outlook and lifestyle, partly on your transport options and partly on how often you have to go into your office and place of work. If you’re fully or largely remote, it may be worth looking at areas further afield or with limited transport options, often reflected in the local property prices.
Buy a property in need of upgrading
Looking for a property needing upgrading is a bit like thrifting in charity shops. There are definitely bargains to be had, but you need to be alert and quick. You also need to be realistic about your goals and totally honest about what you can and can’t do yourself.
Secondly, be clear about how long it will take you to make the necessary changes and the property habitable. This would typically mean ensuring that it was structurally sound (wind and watertight) and had essential utilities. You might be able to live without heating in summer, but in winter, it’s a different story
Thirdly, be realistic about your budget for the updates. Buying a “fixer-upper” isn’t necessarily more affordable overall than buying a home in pristine condition. It just means that you can pay a lower upfront cost, thus making your deposit savings go further. You can then do upgrades yourself or pay for someone else to do them out of your ongoing income.
Consider downsizing while you save
If you can “make do and mend” with a smaller property while you save, you may be able to build a deposit more quickly. Similarly, you might want to consider moving to a more affordable location. A cautionary word, ensure this move doesn’t excessively increase your travel and living costs.
For help and advice about getting on the property ladder, contact Coombes & Wright Mortgage Solutions. We offer free initial consultations without obligation.
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For investments we act as introducers only