Saving for a house – by Jasmine Birtles

Jasmine Birtles is a TV and newspaper journalist and personal finance expert. In her new column she’ll be helping you get the most from your investment and reach your personal goals.  

Whether you’re after a home of your own, or you want to help the kids get on the housing ladder, saving for a house can be a daunting prospect. Fortunately there are various things you can do to get the keys to that first home quicker than you thought.

Add to your savings

To get a mortgage you’ll need a deposit and that’s where people struggle. Stay focused and make some sacrifices and you can get there:

  • If your parents are able to have you, you could move in with them temporarily and put aside money you would have spent on rent and bills.
  • Cut your costs including going out, getting takeaways, spending on clothes and the like.
  • Switch all the bills you pay to get the cheapest monthly rate.
  • Check your old direct debits and cut subscriptions including magazines, gyms and unused apps.

Use every scheme going

There are a few Government schemes around specifically aimed at first-time buyers, so make the most of them.

Help to Buy

Help to Buy Shared Ownership works like the schemes run by Housing Associations. You get the chance to buy a share of your home (between 25% and 75% of the value) and then you pay rent on the remaining share. Later on, you could buy bigger shares or the whole lot once you can afford to.

The Help to Buy Equity Loan is a government scheme that helps buyers get a new build property in England. It’s set to run until 2020 and is available to homeowners looking to move as well as first time buyers, but only for new-build homes that are worth under £600,000. It gives an equity loan of up to 20% of the price of the house you want to buy and it means that you personally only need to put down a 5% deposit to get a good mortgage.

The Help to Buy ISA is a savings scheme where the government will top up your savings by 25% (up to £3,000). Your first payment to your ISA can be up to £1,200 and then you can pay up to £200 each month. When you buy your property, your lawyer will apply for the extra 25%. Happily you don’t have to pay it back.

Find out more about all three here.

Starter Home Scheme

In this scheme, 200,000 new build homes will be made available (soon!) to first-time buyers under 40 years old. At least 20% will be taken off the market price, costing no more than £250,000 outside London and £450,000 in London. There’s more here.

Get your parents to help

You’ll probably have had this conversation already, but if your parents or grandparents can help with the deposit it can be invaluable.

However, if they want to help but don’t have the money, they could still be a guarantor for you. There are several ‘guarantor mortgages’ on the market that allow parents, grandparents, or friends to help you buy a property without actually having to hand over any cash at the start. Ask a mortgage broker which lenders offer these.

Try Shared Ownership

…with a housing association

Shared Ownership is usually run by a housing association or council. You own part of a property and pay a small rent on the other part which is owned by the housing association or council.

Competition is high for a place on a housing association list so get in as soon as you can. You can only be on it if your household income is less than £80,000 per year outside of London or less than £90,000 per year inside London. You can find out more here.

…with a friend

Consider doing your own, private ‘shared ownership’ scheme where you buy with a friend or partner. It’s a bit risky but so long as you know that you can get on with the other person, and you have watertight contracts in place, then it can work.

Make extra cash

Aim to make at least an extra £100 a month with a side-earner. You could be  a film extra, do focus groups or babysitting, make cakes to sell, mend computers and more, depending on your skills and time. See the Make Money section on my website, MoneyMagpie.com for more ideas.

The views expressed here belong to the author and do not represent those of Funding Circle. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice.

The information and views contained here are provided solely for informational purposes and should not be construed as legal, tax, regulatory, accounting or investment advice, or as a recommendation or an offer or invitation by Funding Circle.

To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, such information contained here.

If you have any questions, please speak to your professional adviser or seek independent specialist advice.

Jasmine Birtles