Counting the days – How to save for a house deposit within three years’ flat

It seems that it’s all grim news for those hoping to get on the property ladder. Little wonder why, either. As back in 1977, the average deposit for a first home was just £1,094. In 1997, it was £2,200. But by 2017, those figures had sky-rocketed to £25,867. 

So what’s a first-time buyer like you to do? Here’s what (warning: scrimping and scraping essential).

Saving for your first home: Our five top tips 

Consider your options

The typical first-time buyer puts down £20,000. But that’s not your only option. You should also consider…

  • The ‘Bank of Mum and Dad’
  • Purchasing alongside friends and family
  • Going for shared ownership
  • Using a Help to Buy or shared equity scheme

Look at the market and decide how much you need to save

If you need £10,000 in three years’ time, you’ll need to put away approximately £265 per month. However you need to bear in mind that the market moves rapidly. Over the last 12 months alone, property prices rose by 0.7%. On a £100,000 home, this equates to an increase of £700.

Cut out the non-essentials

Take-aways, that daily coffee, holidays, it’s all got to go. It’s tough, but worth it.

If you’re already living alone, you should at least consider switching your utilities, and at most, think about whether you could move back into mum and dad’s for a while (the average UK rent for properties outside of London stands at £500 per month – that’s £6,000 a year PLUS all the associated costs).

Decide on where you’ll put your savings

Check the ‘Top Savings Accounts’ from MoneySavingExpert for up-to-date guidance as to what account will provide the highest interest. You’ll need to bear in mind whether you want an account that provides instant access, or that locks it away for a fixed period. You should also keep track of how your savings are progressing each year.

Research This Mortgage…

You need to know something… a 100% mortgage has been launched. 

There once was a time when 100% mortgages were commonplace. Then the financial crash happened. Now, it seems that the tide is turning, with Halifax launching their 100% mortgage for first time buyers (no deposit required).

Rather than demanding a lump sum, Halifax accepts the savings of parents or family members to provide 10% security. This provides access to a three-year mortgage at a 2.9% rate, with the savings held (and paid) a rate of 2.5% for the same time.
Once the three years are up, the savings and interest will be returned to the owner of the funds (if the mortgage holder has kept up with the repayments).

“While increasing numbers of first-time buyers is good news for the housing market and they are not far off the peak of the last boom which was just under 190,000 in 2006 – it’s saving enough to get a foot in the door that’s still the biggest blocker”.

– Russell Galley, Halifax

Saving for a house deposit is tough. Many sacrifices must be made, a lot of self-control is called for. Once you’ve placed those many hard-earned pounds down on your new place, we’ll be ready to pack up and ship you off to your new home.

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first time buyers