Get on the property ladder:seven tips for first-time buyers saving for a deposit

Saving is back in fashion, with small adjustments making a big difference - such as haggling on the price of big purchases and ditching the gym membership.

Saving for a deposit is the toughest hurdle for London’s first-time buyers. Building your fund is all about acting quickly, to take advantage of government help and seek out those high-interest savings accounts where your nest egg will grow the fastest. My tips for smarter saving could get you on to the property ladder faster.

Help to Buy ISAs are a must for all first-time buyers saving for a deposit. Not only will the Government add 25 per cent to your savings, up to a maximum of £3,000, you can also receive up to four per cent in tax-free interest while you save. Santander bank and Cumberland and Penrith building societies all offer Help to Buy ISAs.

First-time buyers still qualify, even when buying with someone who already owns property — parents, for example. And if multiple first-time buyers club together for a property, they can each have their own Help to Buy ISA.

However, as savings are capped at £200 a month, plus a maximum £1,000 initial deposit, it will take more than four years to reach £12,000 and unlock the maximum £3,000 of government help. So if you want to get a chunky deposit together before that, you will need to save elsewhere, too.

Regular savings accounts: thanks to the new personal savings allowance of £1,000 for basic rate tax payers, 95 per cent of people now pay no tax on their savings. So it’s a great time to use saving schemes that reward regular monthly deposits with annual interest rates of up to six per cent.

To access these accounts you typically need to hold or switch to the same bank’s current account. HSBC, First Direct, Santander, Nationwide and TSB all offer five per cent-plus on regular savings accounts.

The catch is, these offers rarely last more than 12 months, after which your money is usually funnelled into an account paying horribly low interest. Note the anniversary of your deal and be prepared to open a different one.

Bank smart: when your goal is to buy a house, you don’t want to be wasting your cash on unwanted services offered by your bank for a monthly fee. On the other hand, perks such as money back on purchases, travel insurance or car club membership can be worth more than buying them separately, so choose with care.

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Run it off: ditch the gym membership all summer and exercise in your local park (Getty)

Credit cards: make sure you can pay off your credit card each month to avoid hefty interest charges. If it’s too late for that and you’re already in debt, transfer it to a zero-interest deal, work out a plan to pay it off within the given time frame — and stick to it.

Shop smart: to be able to save that bit more each month, you need to make your money go further. Don’t dismiss the usefulness of loyalty cards. Shop with them regularly, take advantage of extra-points deals, and before long you’ll be able to do a shop for free.

Haggle: remember those bartering skills you showed off while on holiday in Morocco? They could be just as useful here, not in Tesco of course, but when buying any big-ticket item. Ask for a chat with the store manager and prepare to unleash your best negotiating skills.

Take a walk in the park — well, a run. Summer will soon be here, so why not ditch that gym subscription and design yourself a free outdoor training programme in your local park? If group activities are your thing, consider joining one of London’s many local sports clubs. Their weekly subs are often far cheaper than a gym.

 


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