So you want to get on the property ladder eh? Owning your own home is still seen as one of the most important life goal for people. And there’s a good reason for this. Whether you aspire to retire early or just don’t want to have to worry about money during retirement owning your own property has a certain level of satisfaction.
In ths post, I want to share some tips and tricks that I have found from living in one of the worlds most expensive cities (London) that can help you with this.
Take advantage of government schemes
As a first time buyer, you have the ability to build your deposit using a LISA (Lifetime ISA) account. This is an account that the government will contribute 25% of the deposits you make, up to £4000 in deposits per year. These funds can only be used for a first home or if you are over 60. There is other eligibility criteria below:
You can withdraw money from your ISA if you’re:
- buying your first home
- aged 60 or over
- terminally ill, with less than 12 months to live
You’ll pay a withdrawal charge if you withdraw cash or assets for any other reason (also known as making an unauthorised withdrawal). This recovers the government bonus you received on your original savings.
The charge is currently 20%. It goes back up to 25% on 6 April 2021.
This is a surefire way of being able to generate a large deposit and these funds can also be invested in the share market if you also want to make a return on this.
Set yourself a goal
Having a goal in mind of when you want to buy a house is super important. For me, it really helped to be able to break down my goal into smaller steps so that when each time my salary was paid into my account, I could tangibly see what impact this was having on my goal. If you have a partner it’s critical your goals align with them so you can work towards this together.
Automate your savings
When you get paid your salary into your account, transfer your target savings into another account. This will mean psychologically you will think the money is not yours to spend and it will create at least a small barrier. I saved my money into a Stocks and Shares ISA which helped because it was more difficult to withdraw money and this helped me to ensure I didn’t spend this money.
Earn more money
I know this seems more simple than it really is but there will be a limit as to how much you can save, without impacting your ability to enjoy life. You should seriously consider trying to increase your income whether that’s through a side hustle or from upskilling at work and getting a promotion. One of the big advantages of being young and saving for a deposit is that you will have more time than the future version of yourself, because you are not tied down with raising children. So make use of this time!
By employing some of the above strategies, you can cut down the time it takes to save up that deposit and get onto the property ladder faster.
Have anymore tips I have missed? Let me know your thoughts!