collaborative post | Getting on the housing ladder can be a difficult thing to accomplish, especially if you don’t have the financial backing of wealthy parents to fall back on. Getting the money together for a deposit needn’t be impossible, however, especially if you know the right saving strategies.
For most lenders, the minimum deposit for a mortgage is around 10% of the total amount borrowed. Let’s take a look at a few of the financial tools and techniques that might help you to reach that target for savings.
Traditional Savings Accounts
A savings account is an obvious and fairly optimal way of putting funds away for later spending. They’ll offer various interest rates and fees, and so it’s important to shop around and do your research.
In most cases, you’ll be punished for brand loyalty. Be aware that small differences in interest rate will compound over months and years, and so it’s worth paying close attention to minor differences, not only at the point of investment, but on an ongoing basis, too.
Help-to-Buy and Government Schemes
The government offers various kinds of support to those looking to buy their first home. Help to Buy was a scheme launched in 2013, under David Cameron, and retired after a decade in 2023. Today, we might consider the First Homes Scheme, currently available in England. To be eligible, you must be able to get a mortgage for at least half the price of the home, be over eighteen, and be part of a household whose median income is less than £80,000 (or £90,000 in London).
Investment and Stocks
There are many financial instruments and products. Bonds, stocks, crypto and other more sophisticated instruments that bring all of these things together: you might be tempted into all of them. Just make sure that you’re aware of the risks you’re taking by investing, and that, where appropriate, you’re proceeding with the benefit of professional financial advice.
A fixed-rate bond is among the more simple products available. You’ll pay in a minimum amount, earn a set amount of interest, and be able to withdraw everything only after a fixed period has elapsed. If you know that you won’t need the money soon, then this is a fairly safe investment. But if you do withdraw early, you’ll be penalised. The longer the commitment, the more generous the interest rate will tend to be.
Lifetime ISAs (Individual Savings Accounts)
Help to Buy is now closed to new applicants, having been superseded by the Lifetime ISA, which is a way of saving for retirement, or for a first home. The government will match 25% of your savings, provided that you are between the ages of eighteen and forty, up to a maximum of £1,000 per year. You can only withdraw the money if you’re over 60, buying your first home, or terminally ill