Saving for a deposit!

February 2017
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Building up a deposit is one of the biggest hurdles of getting on the property ladder.
Rising house prices have meant that those looking to buy their first home often need to put down a large deposit which can seem impossible for most of us. 

We've found some tips and ways that you and can begin saving for that dream first house!



Research
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Research house prices for the type of property you want to buy, in the area you want to buy. Sounds a simple place to start, right? Find out how much houses or flats are going for in the area in which you want to buy your first property. Keep an eye on these prices by using websites such as Right Move or Zoopla
 
Once you've got an idea of current prices you'll know how much you'll need to save to get to that magic 5% mark.
 
Buying a house or flat isn't just about the deposit though. You'll need to think about other costs as well, such as stamp duty, legal fees, survey fees and any upfront mortgage fees you'll need to pay. Look at current 95% mortgages and associated fees, and maybe even ask a local solicitor how much you might have to pay in legal fees.
 
Total your deposit and the various fees/taxes and you'll have the amount you're going to need to save. 
 
Budget
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Take a long hard look at your budget. Sit down and itemise all the money you've got coming in and going out. How much can you afford to save every month?
 
Remember that your end goal is a challenging one so you'll probably need to set a fair proportion of your monthly income towards saving. This might mean restricting the amount you spend on nights out or on luxuries.
 
At any rate, be sure the amount you can commit to isn't unrealistic. It's going to take a long time to save and that's a long time to feel stressed and miserable!
 
From what you can comfortably save, work out how long it will take to get to the figure you need. For example, if the amount you are trying to save is £9,000 and you can afford to save £300 per month, then you're looking at about 30 months – or 2½ years.
 

Don't be put off by how long it takes, just remember why you are saving and what you are saving for.

 
Plus, you don't know what's around the corner. You could come into some money, get a salary increase or a bonus – all these things could bring your dream of home ownership a little closer.

 
Savings Account
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When saving for your first home you're going to need a savings account that allows you to contribute regularly to it. The Help to Buy: ISA is aimed at helping people save for their first home and is available to prospective first-time buyers over the age of 16. 

With a Help to Buy Isa, the government will add a £50 bonus for every £200 saved in the account, up to savings of £12,000. This means savers could benefit from a maximum bonus of £3,000. The bonus is available on properties worth up to £250,000, or £450,000 in London, and will be paid when you buy your first property. 
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Accounts are per person, not per property, so people buying together can both receive a bonus. Savers can make an initial deposit of up to £1,000 to open the account and then pay in up to £200 each month afterwards. 
Another benefit of the Help to Buy Isa is that, like other Isas, any interest you earn will be tax-free. You can save up to £15,240 into an Isa in the 2016/17 tax year. 


Regular savings accounts often pay attractive headline rates of interest and can be a good way to make sure you're putting money aside every month. But they often have restrictions that you need to watch out for. For example, there may be limits on the number of withdrawals you can make each year, you may receive less interest if you miss a month of savings and you may need to have a current account with the bank.

If you already have a small lump sum built up, but it’s going to take you a few years to save up the rest of your deposit, you could get a better rate of interest by locking your money away for a year or more.

You could consider a one or two-year fixed-term fixed-rate savings account for your lump sum, and then use your cash Isa allowance or a regular savings account for the remaining amount of the deposit that you need to accumulate.
Set up a regular payment
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We all hate bills, but we all know they have to be paid. If you treat saving like a bill by setting up a regular payment you'll soon get used to not having the extra cash in your bank account each month. 

Most savings accounts will let you pay in every month via a standing order or direct debit so you won't even need to remember to make the payment (although you will have to ensure you've got enough in your bank account on the date the payment goes out!). 
 
Be patient and be prepared to be flexible
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House prices can change considerably, even in a relatively short space of time. You could face the frustration of getting all your money saved, only to find you haven't quite got enough to buy a property. 

You'll need to be patient and flexible. Keep a regular check on house prices in your area and keep reviewing your savings plan. You might have to save more each month, or accept that it's going to take longer to achieve your goal. You might even consider compromising on the type of property or the area you want to buy in. 

Of course, this all assumes that house prices will continue to go up. There is the possibility of them levelling out or even coming down a touch. And if that happens, you could be in a position to buy a little earlier than you expect!