So, to make things a little bit easier we’ve partnered with WhatHouse? to create the ultimate buying guide to take you through the whole process, step-by-step; from house-hunting to past moving-in day.
There are plenty of handy tips on how to anticipate and avoid complications, as well as expert advice on how to successfully purchase your dream new home.
The first of our New Home Buyers guide series, focuses on saving for a deposit, with five key tips and tricks from Daniel Hill, Director of WhatHouse? to maximise your saving potential.
First, take a look at the place you’d like to live and the type of property, to see what kind of budget you’ll need. You’ll have to pay a deposit on exchange of contracts in order to take the buying process forward. Because of mortgage lending criteria, first-time buyers are often asked to lay down over
20% of the property’s value. The latest figures from Halifax show that the average first-time buyer deposit in 2020 was over £57,000, plus other expenses, such as legal and removal fees (typically around £2,000+), and stamp duty. So, what’s the best way to maximise your savings?
1. Set yourself a budget
Work out your total household income and your essential bills. Will you save money by switching energy/phone/ broadband/insurance providers? You’ll have to prioritise other spending too, as things like holidays can really affect your savings progress.
2. Work out a schedule
How much do you need in total, when are you aiming to buy and what can you save on a regular monthly basis? If you are planning to save around £15,000 to £20,000 to buy a home in three years’ time, you’ll need to put by an average of £400 to £550 per month.
3. Choose the right savings account
Saving accounts with no instant access will offer a higher interest rate – and will stop you suddenly withdrawing money from your funds. Some do allow an occasional withdrawal in case you want access for an emergency.
Set up a regular payment from your current account and keep an eye out for accounts that offer a better rate. Use ISAs. On a cash ISA, people over 16 can pay in up to £20,000 a year and will not pay any tax on the interest. If you’re under 40-years-old, you can set up a Lifetime ISA (LISA). You can save up to £4,000 into one of these each year, with a 25% bonus of up to £1,000 received from the government annually.
4. Don’t rent, or rent better
Monthly rent will often be more than the mortgage payment on an equivalent home. You might find somewhere cheaper to rent than your current place but better still, if you can sacrifice some independence, move in rent-free, or at least flatshare more cheaply, with family or friends.
Alternatively, if you have the space and your landlord allows it, sub-let a room where you currently rent. Whether or not it’s someone you already know, this is a handy way to reduce your split of the rent and save some money by sharing some of the overheads.
5. Bank of Mum and Dad
Parents, grandparents or other generous relatives may wish to help you with something towards your deposit. Whether as a gift or loan, this can be a great contribution to your funding target – just ensure that both sides are clear about what ‘terms and conditions’ there might be. An alternative would be for them to act as a guarantor on a mortgage, meaning they would be liable if you were unable to repay the loan to the bank.”
Keep tuned for part two of the New Home Buyer series, where we look at credit scores, what it means to have a good credit score and how to boost your credit rating.
Or to download the full guide, click here.
