Saving for first home

Lmm08

Hi everyone 

I’d love some advice. I grew up
not learning a lot about how to manage money. At one point I had £7000 worth of CC debt which I can proudly say I’m now clear of!
I’d like to start saving for my first home. I’ve read about Lifetime ISA’s (or LISA). Am I right in understanding that if I put in 4K before April I will be given an extra £1000? And next year another £1000 if I save another £4K? I’d just like a bit more advice on how it all works. Can I only put in £4000 per year? Is it worth looking around at different rates or are they all similar? I’ll be saving £1300 per month as I’m living with parents at the moment. Should I open another savings account for the rest?

I did a ‘soft check’ to see what kind of mortgage I could get. Turns out only £113,000 according to these checks which means I need a hefty deposit saved. My friends said to see a mortgage advisor as they were offered more than what the online checks suggested. Did anyone else experience this?

I know I should probably know and understand more about money at the age of 31 but learned the hard way to be careful. Any advice would be very much appreciated

eskbanker

Lmm08 said:

I’ve read about Lifetime ISA’s (or LISA). Am I right in understanding that if I put in 4K before April I will be given an extra £1000? And next year another £1000 if I save another £4K? I’d just like a bit more advice on how it all works. Can I only put in £4000 per year?

https://www.moneysavingexpert.com/savings/lifetime-isas/ answers these (short answer: yes) and lists best-buys.

Albermarle

I know I should probably know and understand more about money at the age of 31 but learned the hard way to be careful

Having some knowledge about personal finance issues is a good life skill to have . I suggest generally you take some time to start to educate your self about savings, investments, pensions ( and LISA's ) . 

Go to the home page of MSE and click on the 'banking and savings ' header.

Lmm08

Albermarle said:

I know I should probably know and understand more about money at the age of 31 but learned the hard way to be careful

Having some knowledge about personal finance issues is a good life skill to have . I suggest generally you take some time to start to educate your self about savings, investments, pensions ( and LISA's ) . 

Go to the home page of MSE and click on the 'banking and savings ' header.

It is a good life skill to have. I’m definitely reading and learning about money and saving now to make up for it

G1965

Hi - I've been looking at getting my son to open a LISA to help him save for his first home. The obvious attraction is that the government will contribute to the overall ISA. My quesiton is that my son does have have a great credit record and, although it's a few years away, I was wondering what would happen to the LISA if he was refused a mortgage? I've read a lot about how early withdrawal penalties apply - and that's OK as he would not plan to do that but if he couldn't get a standard mortgage offer it doesn't seem clear (in the websites I've read including the Government's) what would then happen and what options are available? I'm hoping my son's credit record will improve in the time between now and when he is looking to buy (about 8 years).

Thanks for any advice or links to documentation ...

grumiofoundation

G1965 said:

Hi - I've been looking at getting my son to open a LISA to help him save for his first home. The obvious attraction is that the government will contribute to the overall ISA. My quesiton is that my son does have have a great credit record and, although it's a few years away, I was wondering what would happen to the LISA if he was refused a mortgage? I've read a lot about how early withdrawal penalties apply - and that's OK as he would not plan to do that but if he couldn't get a standard mortgage offer it doesn't seem clear (in the websites I've read including the Government's) what would then happen and what options are available? I'm hoping my son's credit record will improve in the time between now and when he is looking to buy (about 8 years).

Thanks for any advice or links to documentation ...

LISA can only be used  when purchasing with a mortgage.

If he is looking to buy in 8 years think is very unlikely that stuff on his credit report now will weigh heavily on any application (assuming more 'issues' aren't added). 

Alexland

If he wasn't able to get a mortgage and therefore not able to make a qualifying penalty free withdrawal the LISA account would just sit there until he withdraw the money at age 60+ or earlier if he wanted to pay the penalty.

Lmm08

I’ve had a credit card and got up to £7000 but that’s cleared now. Would this impact my chances of getting a mortgage? I just assumed as it’s cleared then it wouldn’t. 

Alexland

Lmm08 said:

I’ve had a credit card and got up to £7000 but that’s cleared now. Would this impact my chances of getting a mortgage? I just assumed as it’s cleared then it wouldn’t. 

Depending how long ago it might still be part of your credit history and lenders may consider it but if you didn't miss any payments and it was gradually repaid that shows some positive aspects of managing credit. If you missed payments or had to enter special repayment agreements they might take that more seriously.