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4 ways to save for your deposit

First-time buyers share their tips

Looking to buy your first home but struggling to save for a deposit? From reducing rent to getting savvy with savings, there are ways to make it easier. Find out more by clicking on the tabs below.

It can be a real slog saving up to buy your first property, so we asked a few first-time buyers to share their advice on what helped them get a foot on the ladder.

1. Help cut the cost of your rent

Paying less rent is an obvious way to free up money for a deposit, so think carefully about your rental options.

Save money on a flat-share

To save money on a conventional rental, think about moving in with friends who have a spare bedroom or seek out housemates on flatshare websites. Try to find somewhere near your place of work to save on transport, and don’t miss opportunities to negotiate a deal in a shared property. If one bedroom is a lot smaller than the others, for example, offer to take it in return for paying a lower share of the rent.

Bear in mind that many shared tenancies work on the basis of joint and several liability – meaning all tenants are jointly and individually responsible for paying the rent. If one tenant moves out, the remaining tenants still have to ensure the rent is paid in full.

Try co-living

You might also want to look at co-living developments – where you rent your own bedroom but share communal spaces, such as kitchens and work areas, with other tenants. It’s a bit like living in a grown-up version of student halls. The positives are that you can rent as an individual tenant and bills are usually included, which makes budgeting easier. Prices range widely, though, so do your comparisons carefully.

2. How your family can help

There are lots of ways your family might be able to give a helping hand. One option could be to move in with your parents or another family member who might let you pay a low rent – or possibly utility and food bills only – to help you save up more quickly.

Another option is our Family Springboard Mortgage. It allows you to take out a mortgage without having to put down a deposit, as long as a family member or helper pays 10% of the property price as security. They get their money back in five years, with interest, provided you make your mortgage payments on time. If you miss any payments, some of their money may be retained for longer than five years.

3. Get a hand from the government

Are you eligible for a government grant or scheme? It’s worth checking before plunging headfirst into saving for a full deposit. There are several ways in which the government is trying to help first-time buyers: the Help to Buy equity loan scheme; the Help to Buy ISA; and through supporting shared ownership. Bear in mind that these schemes vary depending on where in the UK you plan to buy a home, and that each has its own eligibility criteria.

Help to Buy equity loan

With an equity loan, the government will lend up to 20% of the cost of a newly built home. This means the cash deposit required will be less – just 5% of the total – and the mortgage you’ll be paying will also be lower. To reflect the higher property costs in London, there’s a specific London Help to Buy equity loan where the government will lend up to 40% of the property cost. The scheme is only available in England, though similar schemes exist in Scotland and Wales, but not currently in Northern Ireland.

Ify Anyanwu bought a one-bedroom flat last year with a Help to Buy equity loan, which helped her get on the property ladder more quickly: “I was living at home and, without the loan, it would have taken me another five years to save for a deposit. It took about eight months from the time I was approved for the scheme to moving in, though I did spend some time researching areas I wanted to buy in.”
One of the reasons Ify chose to go for a government loan was that it’s interest-free for five years. She says: “Knowing I don’t have to pay interest on the loan yet is a relief. I know I’ve got a better deal than if I’d had to opt for a 100% mortgage, and I still have a property that’s mine.”

Find out more about Help to Buy equity loans here1. The current scheme runs until March 2021, after which there’ll be a new version that will run for two years and will be available to first-time buyers only.

Help to Buy ISA

The Help to Buy ISA is a savings account for first-time buyers, where the government tops up your savings so you can reach your goal more quickly. They contribute £50 for every £200 you save. The maximum the government can give you is £3,000, but the accounts are available to each first-time buyer, not each household. This means that, if you’re planning to buy with a partner, you could receive a government bonus of up to £6,000 towards your first home.

Bear in mind that the Help to Buy ISA bonus is only available at the completion stage of the buying process, so you can’t use it for your exchange-of-contracts deposit, but it’s still a useful boost for your home-buying fund. Help to Buy ISAs will be available until 30 November 2019. Read about our Help to Buy ISA.

You may also want to consider a Lifetime ISA (LISA), designed to help you save either towards your first home or for retirement. The government will top up your savings by 25% when you withdraw the money to buy your first home, provided you meet the criteria. If you don’t – or if you want to use the money for a different purpose (and you withdraw it before you’re aged 60) – you will incur a 25% penalty charge, so make sure you understand all the implications first. Barclays doesn’t offer LISA at the moment, but you can read about them here.

Shared ownership

Shared ownership lets you buy part of a new-build property and pay rent on the rest, which belongs to a housing association. You can increase the percentage you own by buying further shares in the property (a process known as staircasing). If you ‘staircase’ to 100%, you become an outright owner of the property, but it’s important to check your lease carefully to understand if there are any restrictions. If property prices go up, you’ll pay more for increasing your share; but if they fall, you’ll pay less. If you end up owning the property and decide to sell, the housing association has the first option to buy it back for 21 years from the date you reached 100% ownership.

Shared ownership helped Ranuja Ravindran and her partner Matthew O’Connor buy their own place with housing association Network Homes – something Ranuja believes couldn’t have happened otherwise. “Home ownership is a distant hope for most young people these days, and without shared ownership we simply wouldn’t have been able to purchase,” she says. “We would have been renting indefinitely.”

The couple currently has a 30% share of their property and they’re hoping to increase their share as soon as they can: “To staircase to full ownership in the future would be a dream come true,” says Ranuja. “In the meantime, we still technically have a landlord as we’re paying rent to our housing association; but, this is still better than solely renting.”

Considering shared ownership? Find out if you’re eligible.

4. Be a savvy saver

When building up a deposit for her first home, blogger Nazma Noor2 found a savings plan really helpful. She explains: “I made a spreadsheet to manage my monthly spending and to make sure I was prepared for any large one-off payments. This was a great help in identifying where I was spending most of my money and the areas where I could cut back.”

Nazma also found that having an ISA was invaluable in helping her save: “I used my ISA to the maximum limit, and beyond this I had a savings account which I started using for any savings that went over the ISA limit.” In the 2018/19 tax year, you’ll be able to save up to £20,000 tax-free3, but note that if you have a Help to Buy ISA you can’t usually pay into both in the same tax year. Find out more about our range of ISAs.

Friends and family were also key in helping Nazma save. She says: “They create a support network. My friends were super-understanding of my situation and the fact I was cutting back to save for my property. I kept up my social life; but my friends got used to hearing, ‘Can we go for something cheap and cheerful?’ We made use of vouchers and special offers, so we could still enjoy going out for meals and to the cinema.”

Take a look at our top 10 savings tips and keep tabs on your spending with our budget calculator.

And don’t forget you can get cashback paid into your Barclays account when shopping online and in store at a range of retailers (terms, conditions and retailer exclusions apply). Plus, if you’ve switched on Barclays Blue Rewards4, you get an extra 1% cashback.

At certain times throughout this article we reference websites owned and operated by other organisations. Barclays cannot take any responsibility for the content of these sites.

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