With the average price of a UK home now at £297,527 according to Rightmove and many lenders looking for a 10% deposit to secure the best mortgage deals, getting a foot on the property ladder has never been more difficult. But hope is not lost for Generation Y – by choosing the right account and with a little careful saving, that elusive first home may still be on the horizon.
Cut spending
Saving can be a bit of a chore and you’ll be forgiven if you give up on it quickly – plenty do! But one of the easiest ways to save is to first put more money in your pocket by making a few simple changes to how you spend. This might mean being a little more organised, switching where you shop or simply cutting down on non-essentials. Try MSE’s ‘Supermarket Shopping Tips’ where you’ll find 34 tools and tricks to slash your food bills; or read their ‘Tips, Tricks & Treats’ where you’ll find all the best bargains, loopholes and deals to help you cut down your spending.
Set up your LISA
What would you say to a 25% boost on everything you save – completely free? That’s what the Government’s LISA scheme offers – with the potential of earning an extra £1,000 each year if you save the annual maximum of £4,000 towards your first property. The best cash ISA rates are offered by Newcastle Building Society (1.1% AER variable) and Skipton Building Society (1% AER Variable) or you can open a Stocks and Shares LISA in a few different formats. These include DIY options if you’re happy to make investment decisions yourself (e.g. Cavendish Online), options with some handholding (e.g. Cavendish Online or Vanguard), or options where all the decisions are made by financial experts (e.g. Nutmeg, Wealthify or Evestor). If you’re buying as a couple and you’re both first time buyers, you can each have your own LISA and benefit from twice the bonuses – however, you should be aware that withdrawing money (other than for purchasing your first home or on retirement) attracts a 25% penalty.
LISAs are only available to first time buyers aged 18 – 39 – but if you fall outside of that bracket, there’s always Help to Buy ISAs to consider. These also pay a 25% bonus but you’re more limited on what you can save – £1,200 initial investment, plus £200 a month with a cap of £3,000 on the bonus. Currently the best rate comes from Barclays (2.58% AER variable) with Nationwide, Natwest and Virgin Money also offering competitive rates (2.5% AER variable). Again, if you’re buying as a couple, both can open a Help to Buy ISA to benefit from twice the bonuses.
Save alongside your LISA
Don’t feel confined by the £4,000 a year limit on your LISA – there are plenty of decent savings rates available, allowing you to save more and still earn a decent return. However, just like credit card rates, you’ll need to keep an eye on the interest paid and switch accounts where necessary, as rates often reduce after a year. The Marcus account from Goldman Sachs currently pays 1.5%, as does Cynergy Bank (formerly Bank of Cyprus UK), West Brom Building Society and Virgin Money.
Use an app
The rise in budgeting apps has put the tools you need to better manage your money at your fingertips. Both Money Dashboard and Yolt help you to keep track of your spending and see where savings can be made. The app-based banks such as Starling, Atom and Munro can be helpful in monitoring what comes in and out, and setting limits. Other apps such as Chip, Plum and Cleo connect to your existing bank account, analyse what you could save and transfer the amount automatically to your savings account.
Reorganise your debts
With an abundance of 0% credit cards on offer, there’s really no reason to be paying interest on your credit card balance any more. MSE’s credit card eligibility checker allows you to see which 0% interest balance transfer cards you would be accepted for, without leaving a mark on your credit file. It’s important to keep a close eye on when the 0% rate expires and switch to a different 0% card at this point, to avoid interest charges.
Save on the commute
Whether you’re commuting to college or work outside of Southport, commuting costs can really eat into your budget. If you’ve not already got a young person’s railcard, this can save you a third on rail travel – and there’s now a 26 – 30 millennial railcard offering the same discount. If you’re travelling regularly, check whether a season ticket could save you money – this could be funded by an employer/academic institution loan (ask – many do offer them), a 0% credit card or a commuter scheme such as CommuterClub.
Conveyancing Solicitors Southport
You will need to factor in the cost of conveyancing when saving for your house. We can give you a free, no obligation quote for conveyancing that is valid for three months. This way you will know the costs involved and can factor this into your savings’ plan.
Contact us on 01704 532890 to request a quote for conveyancing in Southport or complete the form below.