Saving for your first home can seem endless, and for those who haven't given it a thought until wanting to buy, it can be super stressful. Though 'tips' on saving are no secret, I have put together my most useful know-how's to help you put down that deposit as quickly as possible!
Tip #1 - Government Backed Schemes
Government backed scheme are a widely known, and highly useful tool to leverage. For first-time buyers who are eligible, it can boost your savings by thousands.
Interested? The most recent Government Scheme looking to help YOU get on the property ladder is the Life-Time ISA. As mentioned, the Life-Time ISA is only eligible to first-time buyers who are looking to live in their new home (not rent, sell, hold).
By saving your money in a Life-Time ISA, you can earn up to 25% on your savings, given to you by the government at the time of buying your first home. That much? Yes! And it's that simple. With you saving even £4,000 over X years, you could be granted £1,000... who would say no?
Conveniently, this ISA is offered by most banks, so if you already have savings, it should be pretty easy to start transferring it over into this one... go,go,go! It's worth everyone speaking to their bank to see if they're eligible, and as these schemes come and go, it's worth getting it set up while you have the chance.
Of course there are other-ways that help you save, using an app along side the Life-Time ISA will boost your savings game to the next level...
Tip #2 - Saving's APP
Saving app's are new to the scene. Over the last few months, we've had multiple hosts contacting us to explore and review the tech made for your personalised saving needs.
These apps offer multiple features, in hopes to aid your home buying in one place, rather than you having to research process step by step. A matter of convenience right?
From exploring saving apps such as NUDE, we can see their main benefits being:
- Direct link to your life-Time ISA, showing how much Gov Grant you are entitled to
- Showing house prices in your area
- offering a structured saving plan based off your income, area and 'dream' home
- link together with a partner so savings are combined
- Gifting feature, allowing family to gift money into your account
and so on...
As you can see, the modern world is adapting to helping you buy your first home, so why not use it?
"We’ve built Nude to make saving (or investing) for your first home way more simple. So whether you’re at square one, or already on your way, we can help you get your keys in record time. – Nude
Tip #3 - Other ISA's
Something I didn't mention about the Life-time ISA is that there's a monthly limit on how much you can put into it. The obvious advice is to try and meet this so you have the maximum funds eligible for the 25% return as government grant, and this section is for those that do!
If you're heavily saving, and aren't able to deposit anymore into your life-time ISA each month (or maybe you aren't eligible?), we need to think about saving smart elsewhere. Generally, savers are inclined to open a savings account with their bank, or even shop around for the best deal, but we're after the BIGGEST return... are you following?
Banks and building societies will also offer standard savings ISA's. There will be many to choose from, so make sure you compare bank to bank and find the best product to suit you. Typically, ISA's have a higher return (APR %), but also have higher restrictions. If your saving money in an ISA, restrictions often apply in the form of money withdrawal. It may be that you can only withdraw the money once every year/two years; or you need to give certain notice. In terms of saving, this is a blessing. You don't want to touch this money until you enter the house buying process, so it's often worth fixing down your savings until you do in order to maximise the return you get.
Tip #4 - Planning...
Planning is crucial part of saving. It may seem straight forward, however it is often overlooked. We've written a separate article detailing this tip, but essentially you should get a plan behind your savings to maximise how efficiently you build up your deposit.
Planning involves research, but it is all worth the effort in the end. Find out how much you will need based off the type of house you want, and what area you will be settling. This can help you set a deposit goal. Then research local solicitors, estate agents and whether you will pay mortgage fees to estimate how much extra you will need.
When planning, it is also useful to tie in your budget so you can plan monthly spending in advance. This will ultimately maximise how much you can save per month without you sacrificing it for something not so important.
And that mean... yes... prioritising. If you're looking at saving asap, outgoings should be prioritised so that only important things are being spent on. Cut down on those nights out, expensive get aways, and online shopping sprees; keep your money for bills, a few treats and Savings!
Tip #5 - Struggling?
There are a few handy tack-ticks you can try if saving isn't going as planned.
Cash. Cash can be one easy way of saving money, as once it's out of your bank, you 'forget' about it. Here are some cash friendly saving methods:
1) Envelopes -
Label your envelopes 1-100, each day/week you pick out an envelope at random. You insert the amount of cash as numbered on the envelope, i.e envelope 1 will have £1, envelope 56 will have £56. you can do this as quick as you like, however weekly is recommended. By the end, you should have £5000 saved up, ready to go!
2) Lumpsums -
Prone to a shopping spree? For every large sum you spend on yourself, whether it be clothes or a new gadget, you should save the same amount. This way, if you aren't able to save the same amount of the purchase, should you really be buying it? ... There are exceptions to the rule, but use your money saving mind.
3) Three Times Over -
One way that helped us save is the Three times rule. This is the principle that if you can't afford it three times over, you cant afford it at all. This method helps prevent impulse buying, and you'll have more excess money by the end of the month to help top up them savings.
Is there a secret to saving?
I don't think anyone will revolutionise saving. Saving is down to self-discipline, financial awareness and shear will. It takes time no matter what! But the earlier you start, the more you'll thank yourself.
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