Deposit saving help please!

Lmm08

Hi everyone, I’d love some help.

I’d like to save for a deposit for my first house. I’ll be doing this on my own but I’ll be saving around £1000 a month. I know I can do this as I’m currently living with parents and I’ve been able to pay off £5000 worth of credit card debt by paying £1000 off a month.

What is the best way to save? As it’s my first property I won’t be spending more than £150,000 but hopefully less, there’s plenty of 2 bed houses in my area for this price. So I guess I’ll need £15,000 saved? I know I’ve missed out on the help to buy ISA so I guess the Lifetime ISA is my best bet. But I don’t fully understand this.

Any help would be very much appreciated! 

george4064

Opening a LISA is a good idea, have a good read through this guide: https://www.moneysavingexpert.com/savings/lifetime-isas/

LISAs can be held in either stocks/investments or cash, since you can raise your required £15k in 15 months (a year and a bit) I would suggest sticking to a cash LISA since you don’t have time to ride out any market crashes before you intend to buy, assuming you want to buy ASAP.

Are you currently working and hence earning a salary? Mortgages typically offer anywhere between x4 to x5 your salary, so check how much deposit you need combined with mortgage to afford the kind of first house you are after.

Lmm08

Hi yes currently working I’m on £25,700 salary but hoping to moving up teachers pay scales over time. 

I’ve been looking at flats and maisonettes too

Albermarle

I think Nottingham Building society has currently the best interest rate for a Cash LISA.
You can open it up all on line . A Family member did it a few days ago with no issues.

Eco_Miser

Note that you can save a maximum of £4000 per financial year in a LISA, That's £4000 between now and April 5th 2021, only £4000 over the 12 months April 6th 2021 to April 5th 2022, and £4000 from April 6 2022. This will get you a further £3000 bonus.

To manage this, you'll need to get your April 2021 contribution in early, and save £8000 during the 2021-22 year somewhere other than the LISA, and move some of that into the LISA in the 2022-23 year.

Paying £333 per month over 2021-22 (plus a final £4) into the LISA and £667 per month into the best two or three Regular Savers opened April 2021 will achieve this and get the best interest on the non-LISA savings.

Thrugelmir

Lmm08 said:

Hi yes currently working I’m on £25,700 salary but hoping to moving up teachers pay scales over time. 

I’ve been looking at flats and maisonettes too

Be realistic with your expectations to get on the property ladder. The dream home can follow. 

MDMD

Lmm08 said:

What is the best way to save? As it’s my first property I won’t be spending more than £150,000 but hopefully less, there’s plenty of 2 bed houses in my area for this price. So I guess I’ll need £15,000 saved? I know I’ve missed out on the help to buy ISA so I guess the Lifetime ISA is my best bet. 

You would probably need more than 10% because the mortgage availability for 10% deposits is extremely limited, often pulled at short notice and will be expensive.

Also you will have other costs (legal fees, surveys, mortgage fees etc) to pay up front or shortly after which you may need the funds for.

MP2609

Hi there, definitely at the moment I would aim for the 15% deposit given the state of the economy at the moment. This would be around £22.5k based on a £150,000 house. 
If I were you I would open a cash LISA now to get the 1-year clock ticking with just a pound. You will have to the end of this tax year 5th April to get £4k in there so if you can do that you could have £5k by the end of April. Also if you can save another 4k in there during the next tax year you will have £10k ready for a deposit. 
As others have suggested, I would then open the highest paying either easy access accounts or regular savers for the remaining amount of the deposit but I would also have another account for the legal and furnishing costs, or do you have some items already? 
Once you clear the CC debt, your savings will quickly add up to. 
Any questions, let me know

Lmm08

MP2609 said:

Hi there, definitely at the moment I would aim for the 15% deposit given the state of the economy at the moment. This would be around £22.5k based on a £150,000 house. 
If I were you I would open a cash LISA now to get the 1-year clock ticking with just a pound. You will have to the end of this tax year 5th April to get £4k in there so if you can do that you could have £5k by the end of April. Also if you can save another 4k in there during the next tax year you will have £10k ready for a deposit. 
As others have suggested, I would then open the highest paying either easy access accounts or regular savers for the remaining amount of the deposit but I would also have another account for the legal and furnishing costs, or do you have some items already? 
Once you clear the CC debt, your savings will quickly add up to. 
Any questions, let me know

Thank you I’ve opened a LISA and I will have 4K in there by April. CC debt almost payed off now
I did a ‘soft search’ to see what kind of mortgage I could get with my income. Only £113,000 according to the website. People have been telling me to see a mortgage advisor  when I can as they were told they could borrow more than the online searches said. 

I’m feeling positive but now have a more realistic view of what I can afford. Looks like I may only be able to afford a flat or maisonette.