How to save for a house
Saving for a house can seem like a huge target to aim for but, with savvy savings tips and Government bonuses, we’re here to help. Let’s make the first-time buyer savings mountain seem a little bit more like a molehill and get your deposit sorted quicker.
Working out the size of the deposit you’ll be able to save will let you know what price range of houses to look for. When it comes to mortgages, if you want the pick of the market lenders then a minimum of a 10% exchange deposit is a good place to start.
For example, if you can save £15,000 you could look for houses of around £150,000. It’s a good idea to have around £5,000 for solicitors fees, decorating and furniture for your new place too. Of course, the amount that you need for your deposit and particular house will vary but as a base, 10% is a good place to start.
Now that you have a figure for your deposit you have a goal to work towards. Working out how much you can save each month will give you a timeline until you’re able to buy your home. For example saving £15,000 from scratch and saving £300 a month will take you four years and two months.
Top tip: Try not to opt for the 'saving whatever is left at the end of the month’ scenario because you're less likely to save if the cash is still available to spend. If you save as soon as you get paid you won't be tempted to spend it.
Is ‘how to save for a house quickly?’ up there on your list of questions that must be answered? Here are some tips to cut costs if you’re renting!
Float the idea of moving back home with your parents if they live locally to you. This could either be rent-free or reduced board and could save you a whole load of money if you have a willing family. For example, if your rent is £500 - you’ll save £6,000 over a year if your parents are kind enough to offer you a rent-free year.
If moving home isn’t an option, could you move to a cheaper place? If you saved £100 on your rent each month that is £1,200 a year.
Both the Help to Buy: ISA and the Lifetime ISA are Government initiatives to help first-time buyers reach their deposit target quicker by awarding them with a 25% bonus on top of their savings.
The maximum yearly bonus for the Lifetime ISA is £1,000 each tax year. You can open The Nottingham’s Lifetime ISA with £10 online or in branch between the ages of 18-39. You can pay in up to £4,000 a year meaning that your maximum savings each tax year could be £5,000 plus any interest earned on top.
Remember that £15,000 target and £300 savings a month? Using a Lifetime ISA could reduce the time from 4 years and 2 months to 3 years and 4 months. You would also earn interest on top of these savings but we have left them out of the calculation for ease of understanding.
These tables are based on the assumption that all deposits are received on the 1st of the month. Actual savings will vary due to days of deposits and interest payments.
||Savings per month
||Bonus earned each year
Open your Lifetime ISA online today or visit your nearest branch to find out more.
- You must save for a year in order to withdraw the money for your first house purchase without paying a 25% penalty.
- The account is specifically for first-time buyers and retirement savers. If you withdraw your savings for another reason, you could pay a 25% charge on the total amount that you have withdrawn which means you could get back less than you paid into it.
- As mentioned above, the Lifetime ISA can also be used for retirement savings. View the product page for more information on this use. If you use the account for a first home purchase you can keep the account open and keep saving into it for your retirement.
A Help to Buy: ISA awards first-time buyers with a 25% bonus on savings between £1,600 and £12,000 at the point of completion of your first house purchase.
You can deposit up to £1,200 when you first open your account and then pay in £200 per month thereafter. The maximum Help to Buy: ISA bonus is £3,000. Use our Help to Buy: ISA calculator to see how much you could earn.
Find your nearest branch to open your Help to Buy: ISA.
Please note that the Help to Buy: ISA scheme will not be taking any new accounts from 30th November 2019. If you already have an account you can still save into it until 30th November 2029 and claim your bonus as long as it is used by 1st December 2030.
If you want to know how to save for a house deposit in a year you'll be pleased to know that these Government accounts can help. And, buying with a partner could mean you’ll reach your goal even quicker if you agree savings targets and make the same level of effort towards saving. If you are both first-time buyers you’ll both be able to use a bonus from a Help to Buy: ISA or Lifetime ISA but neither of you will be able to use both. Read more about this in our guide that compares them.
You would have to wait until you have definitely had your Lifetime ISA for 12 months otherwise a penalty would be incurred. You can use a Help to Buy: ISA at any time but you can only claim the bonus after you have at least £1,600 saved. Bear in mind that accounts will have to be opened in sole names not joint but the funding can be joined together at the time of bonus retrieval.
Here are four tips to reign in your everyday spending.
Contact energy, mobile phone and insurance providers and ask for a better deal, a change of plan or remove things that you don’t need from your tariff.
Quitting your £50 a month gym membership and trying free home workouts from YouTube could save you £600 a year.
Would you usually spend money every day? Even if it’s just a coffee here or chocolate bar there, it all adds up. Challenge yourself with a ‘no-spend’ day. You’ll be surprised how much you’re not spending.
By taking a little time and making an effort to create your favourite curries or pizzas at home you could save a packet on the bill and a chunk of calories to boot.
Check out nine more foodie swaps that could help you with bringing down the cost of your weekly shop too and read our guide on how to save money fast to see if you could save even more!
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