Anyone trying to get on the property ladder faces a mountain of paperwork, rising house prices, the need to sort out their credit score as well as deep pockets to stump up a mortgage deposit. So it can all seem impossible to achieve.
Deposits can be daunting and on average first time buyers need to find £10,800 although if you're looking to buy a flat in London it will be £25,000. This will depend on how much a bank is prepared to lend you, and how much you want to spend, of course
If none of this freaks you out and you're keen to proceed, here's a few pointers on how to get your finances into shape.
Monthly standing order
Saving for a house deposit is much easier if your break down the total figure into smaller more achievable lumps. Commit to saving a set amount per month and set up a standing order to a savings account (ideally a Help to Buy ISA) and set up the monthly debit day so it's just after you've been paid.
Start saving now
When a tenant is spending up to 30-40% of their income on rent, how is it possible to save anything? Raising the cash for a deposit will, for most of us, be a long-term process and you will need disciipline and patience to build up your cash reserves. But even if it's a couple of quid a month, it will begin to amass quicker than you might think.
Pay less rent
Not as ridiculous as it sound. Look around and see if you can find a similar home at a lower rent nearby. Or could you downsize in to a smaller flat? Or maybe move temporarily to a more affordable area? If you paid £200 a month then that's £2,400 a year you're adding to your new home fighting fund.
And after June 1st 2019 tenants won't have to pay any letting fees to move in or out of a property in England other than a holding deposit, the first month's rent plus a deposit of no more than five weeks' rent. This means after that date moving around the rental market should be much more afforable and flexible.
Sub-let a room
If your tenancy agreement allows it, why not sub-let your spare bedroom. This is a good way to bring in extra cash which can be added to your savings, and it's tax-free up to £7,500 a year through the 'Rent-a-Room' scheme.
Check out government help schemes
The government want to encourage home ownership and have various schemes which can help you get on the property ladder.
The gov.uk website has details of these schemes including First Buy and Help to Buy including the Help to Buy ISA which can help you save for your deposit.
But in summary these are:
Shared ownership: This offers first time buyers the chance to buy a share of a property of between 25% and 75% of its value and pay rent on the remaining share. Later on, they can buy bigger shares as and when they can afford to.
Equity loan: The government loans you 20% of the cost of a newly-built home, so first time buyers only need a 5% cash deposit and a 75% mortgage to make up the rest. The loan is for five years and is interest free.
Help to Buy: ISA. If you are saving up to purchase your first home then an ISA or Individusal Savings Account) enables you to save your cash into a ISA and the government will add to your savings by 25%. So, for every £200 you save, the government gives saves a bunus of £50.The most the government will give you is £3,000.
Click here for more detailed information about all the current government schemes.
More information
CreditLadder can help you improve your credit score
If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.
CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.
Remember the information provided in this article is for information purposes only and should not be considered as advice.
