Raising a deposit to get on the property ladder can feel like a monumental task, particularly as official statistics show the average UK house price in September was £234,000.
And one stepping stone for first-time buyers – the Help to Buy Isa – is set to close to new savers from the end of November 2019. Some deals are even closing for new applications before the official 30 November deadline.
Existing account holders can keep on saving into them until autumn 2029, however. The accounts also offer savers a bonus, which must be claimed by 1 December, 2030.
Sam Mitchell, chief executive of online estate agent Housesimple.com, says: “The Help to Buy Isa provided a great stepping stone for first-time buyers looking to start saving. While aspiring home owners could now instead opt for the newer Lifetime Isa savings product, those serious about buying in the not too distant future will need to consider sticking to a strict savings plan.”
So, if you think a Help to Buy Isa might be for you, you’d better grab one fast. But if you miss the boat – or you’re looking for other ways to potentially build a deposit faster – here are Mitchell’s tips.
Make saving towards your goal a regular habit
Breaking down what you need to save into more achievable goals will make it feel more realistic. Rather than just saying you need to save over £20,000, for example, aim to save in bite-size chunks each month – or even weekly.
Micro-saving lets you put money away without even noticing it’s gone. Several savings apps specialise in round-ups, meaning every time you spend, they automatically round up to the nearest pound (or however much you want) and put it straight into your savings.
Use budgeting apps to see where you could be making savings. Look through your regular subscriptions and decide whether you are really making use of that gym membership, for example. Cutting back doesn’t have to be on life’s little luxuries either – for example, switching to a cheaper energy supplier or phone company are “pain free” ways to save money.
Sell, sell, sell
In the run-up to Christmas, look to sell any of your unwanted items, as lots of people will be browsing the internet for items to buy. An added bonus is that you’ll have less to move when you do eventually buy a home.
Cut your rental costs
Renting on your own can make it very difficult to save for a deposit. If you could survive moving elsewhere or sharing with housemates, even if it’s for just six to 12 months, it might help you reach that final goal sooner. And if moving back to your parents is an option, it could really boost the amount you are saving, even if you offer them “mates’ rates” on rent.
A few other points…
In addition to Mitchell’s tips, first-time buyers whose parents have some spare cash to tie up in a savings account for a while, may potentially be able to get a “no deposit” mortgage.
Barclays’ “family springboard” mortgage allows parents to put 10 per cent of the property purchase price into a savings account, which is then returned after five years, with interest which tracks at a margin of 1.5 per cent above the Bank of England base rate. In return, Barclays does not require the first-time buyer to put down a deposit.
Lloyds Bank has a similar mortgage called “lend a hand”, where families can put down 10 per cent of the purchase price into savings for three years, offering 2.5 per cent fixed interest.
Meanwhile, like Help to Buy accounts, Lifetime Isas also carry a government bonus. But with Lifetime Isas, a 25 per cent charge may apply if you withdraw money for any reason other than buying your first home or your retirement – and you must be aged 18 or over but under 40 to open an account.