With interest rates expected to continue to climb in the coming weeks and months, it’s important to know all the top tips and tricks when it comes to saving. Luckily, the mortgage experts at money.co.uk have put together a quick and easy guide for potential homeowners.
James Andrews, Senior Personal Finance Editor at money.co.uk, said: “With interest rates soaring and the cost of living rising fast too, saving for a deposit is harder than ever. But the good news is that there are several schemes designed to help, which you should make the most of in order to maximise your chances of getting on the property ladder in 2022.
“One particularly good option is the Lifetime ISA, which gives you a 25% bonus on savings of up to £4,000 a year if you use the savings to buy your first home, meaning you can benefit to the tune of £1,000 annually.
“Other schemes and mortgage types that can help you buy your first home include: The Help to Buy scheme, The Right to Buy scheme, Guarantor mortgages, Shared Ownership mortgages and First Time Buyer mortgages.
“When it comes to putting your money away, it is usually easier to save a deposit by keeping money in a separate account so you can track it. Saving your money in the right account can boost your deposit fund because it will pay more interest if it has a higher rate.
“Options include regular savings accounts, which often have some of the highest interest rates as long as you pay in a set amount each month, and fixed rate savings accounts, which guarantee their interest rates for a period of three months to seven years.
“Next, you need to work out how much you need to save in order to get on the ladder. A 10% deposit will give you a wide choice of mortgage providers, which means that you’d need to put down £20,000 on a £200,000 property.
“Some lenders offer 5% mortgages, meaning you can put down less money up front, but that the interest rate will be higher. So, if you can, it’s best to save as much as possible before committing to a mortgage.
“Remember, when you’re saving to buy a property, your deposit isn’t the only large expense. Legal fees, removals fees, mortgage fees, the cost of furnishing your home and more can add thousands on to the real-world cost of buying a property, so make sure you have some cash put aside beyond the amount of your deposit.
“To compare mortgage deals from all the top providers, use money.co.uk’s handy comparison tool here: https://www.money.co.uk/mortgages.htm.”