How To Save For A Deposit

The average house price in the UK is £225.956 (Gov.uk, 2017). Which means that, if you’re looking to buy a house, you’ll have to save at least £11.298 to put down a 5% deposit; to get access to cheaper deals from putting down a 10% deposit, you’ll have to save £22.596.

Get the most out of your savings

How to get the most out of your savings depends on your timing:

Short-term savings

• Easy access accounts: Flexible accounts that allow you full access to your money. As a result of this, the interest rate is low.

• Regular savings accounts: It offers the best rate deals. However, you must commit to saving a set amount of money each month and have no access to the money for the duration of the term.

Longer-term savings

• ISAs (Individual Savings Account): The interest is free from tax. However, the pay in is restricted to a set amount of money per year.

• Fixed rate bonds: The interest, which is set over a fixed period of time, is better than on an easy access account. However, you have no access to the money for the duration of the term.

• Current accounts: The interest can be higher than in most saving accounts and you have total access to your money. However, the high interest involves only a set amount of money.

Saving through a Help to Buy or a Lifetime ISA

Both Government schemes help first time buyers, offering a 25% bonus on your savings. But they have significant differences:

Help To Buy ISA	Lifetime ISA
You must be 16 or older.	You must be 18 or older.
Free access to your money.	No access to your money for the first year.
After a maximum initial deposit of £1.000, you can pay in up to £200 a month.	No monthly pay limits, you can save up to £4,000 a year.
Savers can benefit from a maximum bonus of £3,000 once they have saved £12,000.	The government adds a 25% bonus up to a maximum of £1,000 per year.
The bonus is only available for properties worth up to £250,000 (450,000 in London).	The bonus is available for properties worth up to £450,000 in the UK.

Saving money from…

• Sharing ownership: You can buy a share of a property, between 25% and 75, through a Housing Association.  However, This option is only available for first time buyers who earn less that £60.000 a year. In addition, you will have to pay both mortgage and rent (for the remaining portion), but this is caped below market rate at a maximum of 3%.

• Having a lodger: At first, the idea of having a lodger can seem dreadful. But it could pay for your deposit or the whole of your house! A simple trick to get more money when renting is by charging per week. Typically, potential renters will see advertised £125 per week and will multiply this amount by 4, leading them to think that the rent is £500 a month. However, a year has 52 wees, which means that in reality they’ll pay £541.67 a month.