Let’s get one thing straight; millennials are getting on the property ladder. Don’t believe everything you read in the news.
If you want to know four home buying tips for millennials to save a house deposit – all without denying yourself a decent quality of life, then read on…
Step 1: Take advantage of the government schemes
Make the most of a number of government-funded schemes to help you onto the ladder, such as Help to Buy and exemptions from stamp duty. Thanks to government legislation, very few first-time buyers are having to pay stamp duty these days. This tends to save them an average of more than £2,000 on homes costing around £210,000 – the average across the country – and more than double than in London. That can mean a great saving for many first-time buyers. Make sure you seek independent tax advice on this, so you have all the facts and figures. You can also get a 25% top-up on your deposit through various Government schemes – such as the popular Lifetime ISA. In addition to this, first-time buyer deposits aren’t as much as you might think, ensuring this ‘top up’ makes it far more achievable:
Average first-time buyer price in the UK (July 2018):
If you want to buy a property for £208,378 (the average property price for first time buyers in England) and need a 5% deposit of £10,420, you actually only need to save £7,815 with a Lifetime ISA and the Government will ‘top it up’ with a £2,605 bonus on completion. This makes it that little bit easier to get the keys to your first home. However, we always recommend you speak to a mortgage adviser first. This way, you can talk through your own personal circumstance to find out if this is a good option for you.
Step 2: Saving for a deposit when you earn under £25,000
Whilst this may seem like a difficult task, it is not impossible, especially if you don’t do it all in one go. Our recommendation is to break it down into manageable chunks.
- Example Goal: £8,000
- Saving £5,000 over three years means you need to put away around £140 per month.
- Save £140 pcm for 3 years = £5,000
- That’s roughly the average monthly running cost for a car. A holiday can easily cost £1,000, so over three years, that would be £3,000 saved.
- Cutting out expensive holidays (£1,000 per year) for 3 years = £3,000
Now remember, this doesn’t mean you can’t ever go away on a family holiday, you just have to look for different opportunities. For instance, you could stay with family friends who live abroad or rent a self-catering holiday home. You could even hold out for a last-minute cheap deal, so your holiday only costs half what you normally pay. Just these little things could save you approximately £8,000 in three years.
Step 3: Are you finding the right deals or paying a premium you don’t need to?
There are some great deals out there if you just hunt around. Try using comparison sites to make savings on your household bills, or perhaps you could try switching your energy provider. The savings you make can be surprising, and very satisfying!
Likewise, instead of going out for supper, why not start a supper club where you all go to each other’s houses and all bring a dish? Not only is this a great way to cut your costs of socialising, it’s a lot of fun too.
Step 4: Consider your choice in car, and avoid car finance
We’d all love to drive around in a brand-new top of the range family car, especially when there’s tempting car finance offers of just £100 or £150 per month, but this can really hinder your ability to get on the property ladder.
Instead, look at buying a good second hand car that will get you from A to B, without any car finance. Not only could you save more money each month towards a deposit, but it’s also likely to mean you can borrow more, as any car finance will be taken into consideration when you’re being assessed for mortgage affordability.
We really hope that these tips have inspired you to start thinking of creative ways to help you save for your first home. Give them a go. Before you know it, you’ll be well on your way to saving for a deposit and then getting the keys to your first home.