I've always dreamed of owning my own home one day. But as a freelancer whose earnings can vary drastically from one month to the other and a single buyer, there has been a lot to consider. I had planned to hopefully move out of the family home by around my thirtieth birthday, which was this year. But as we've seen in recent years, property prices have risen to a point where I've almost been priced out of the market right now. I do have a specific area in mind that I'd love to live in but there are a limited amount of houses that I could realistically afford. However, saying that, when it comes to saving for your first home deposit, I have been able to savvily save during the past few years, enough to cover my deposit.
So I thought that I would share some of the tips and tools that have allowed me to save up for my first home deposit. And here they are;
Open a Lifetime ISA
The first thing that I would recommend to anyone planning on buying their first home is to open a Lifetime ISA. You need to be 18-39 to open one and you can pay in up to £4,000 per tax year (every 6th April to 5th April). You can also open one online from just £1. You need to have a LISA open for 12 months before you can use it to buy your first home. But if you need to withdraw the money before this, there is a 25% withdrawal fee. There’s also a 25% withdrawal fee if you use the money for anything other than your first home or retirement.
For first time buyers, one like the Beehive Money Homebuyer LISA will give you tax free interest on your savings and a 25% government bonus on your contributions. So, if you put in the max £4,000, you'll get a £1,000 bonus.
You can also choose to leave your Lifetime ISA open after using it for your first home, so that you can save for retirement and then withdraw at age 60.
Consult a mortgage expert or broker
You may not think that you can shop around for mortgages or access different deals but this can make a huge difference to the amount that you pay over the lifetime of your mortgage. Beehive Money handily offer access to in-app mortgage advice with their experts as part of their Mortgage Advice Bureau. Whatever your situation they’ll search over 90 lenders and 12,000 deals to try and get the right mortgage for you.
The Beehive Money app is available to download on the App Store and Google Play. There are some terms and conditions to keep in mind though. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed. Your home may also be repossessed if you do not keep up repayments on your mortgage.
Be realistic about what you can afford
While we've all probably lusted over multimillion houses on Rightmove, be realistic about how much you can afford. You'll need to consider your annual earnings as well as your monthly outgoings to determine what you can comfortably afford.
Try a saving challenge
When we went into lockdown I completely changed how I shopped and spent money. One thing that really helped was trying a saving challenge. I opted for a low buy year last year, which made me much more accountable when it came to what I was spending. But you could try a no spend weekend or even a no buy month to save some serious money. You'll be shocked at how much you can save simply by adjusting the way that you think about spending.
Share your saving goals with others
And this is another one of my biggest tips. Let your friends and family know that you are actively saving money and why you are doing it. That way they can help you to stay on track and you can suggest some cheaper alternatives to normal activities. Instead of eating out at a restaurant, why not each bring a dish to someones home. Or why not spend time instead of money with one another. Even just doing this some of the time will enable you to put some money away.
So those are my top tips for saving for your first home deposit and first home in general.
If you've bought your own home, do you have any tips of your own to share? Do you have a Lifetime ISA? And what are you saving for?
Written in collaboration with Beehive Money (Beehive Money is a trading name of Nottingham Building Society)
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