Help to Buy rules are changing this month (Picture: Getty Images)
This month brings us the new Help to Buy scheme, in which eligible buyers will be able to reserve a new-build home. Running for two years, the scheme will be made available from 16 December 2020 with the aim to increase the number of first-time buyers.
It may often feel that there is no hope for first time buyers – from depressing stats about house prices rising to the UK economy being plunged into a recession – especially now that Covid-19 has been thrown into the mix.
But there are things you can do to improve your chances of getting on the property ladder.
Looking to buy for the first time but not sure where to start? We asked experts for their advice and tips on what you could be doing to put you in the best position.
Revamp your attitudes to shopping
Getting organised with your food shopping is one of the easiest ways to start changing your spending habits.
‘Deciding what to eat every day and relying on your local shop can soon spiral your costs,’ says Ellie Austin-Williams, Financial Coach & Founder of This Girl Talks Money.
‘Especially with working from home more. Plan out your meals each weekend for the week ahead and do one main shop, topping up with any fresh ingredients if you need. You’ll often see your food costs drop dramatically.’
Other swaps you can make include investing in a reusable thermal coffee cup so you can make your coffee at home/work, suggests Lola – a content creator who saved £57,000 for her first flat in London.
‘It doesn’t have to be every day but this can help to save £5+ per day which for someone who works a 5-day working week is over £1,000 per year!’
‘I love going out for lunch with friends and that’s something I’ve always tried to do. I did however realise that I was spending a lot of money eating lunch every day, even if it was alone at my desk,’ Lola says.
‘All the Pret lunchboxes, Starbucks coffees and similar can really add up.’
It may seem cliche to suggest that coffee and lunches are the sole reason for not being to buy a house, but for many a big spending review can increase your deposit and get you closer to ownership.
Iona Bain – Founder of Young Money Blog & Agency and author of OWN IT! How our generation can invest our way to a better future, agrees.
Iona suggests creating a ‘spending’ book, especially if you’re ‘in the habit of spending online when you’re bored or need a pick-me-up’.
‘As you go through your life, make a list of the stuff you need and put it in the book. If it’s not in the book, don’t buy it,’ Iona explains.
Getting out of that passive mentality could be a great way to make some savings.
Saving websites such as the Really Moving Deposit Savings Generator can help with this. It shows how you can impact your house deposit if you give up things like coffees, gym memberships, etc.
Make putting money aside a habit
It may seem like a simple fix, but if you’re keeping money you’re trying to save in a spending account, you might be tempted to dip into it.
Iona suggests aiming to save at least £4000 a year (if you can afford this, of course) . She explains that saving this amount ensures you will receive the maximum grant available from the government – £1000 per year, when you put that into a cash Lifetime ISA.
You can open one if you’re under 40 and not already a homeowner – and you’re not limited to using it for properties covered under the Help to Buy equity loan scheme. It covers any property on the open market, as long as it costs under £450,000.
For those who are self-employed, Owen Woodgate, Managing Director for Tax for Actors warns that they should be ‘extra mindful of how much their business is spending’ as it can be more difficult to secure a mortgage as a self-employed individual.
‘If your goal is to buy a property with a mortgage, the years preceding may not be the best time to invest in new equipment, revamp your website or take an expensive research trip to Australia,’ Owen explains.
‘You want to ensure your company profits are healthy and consistent in the two to three years before applying for that all important mortgage.’
Consider getting a bike
While many are working from home, some of us are still commuting for work or at least plan to once life returns to some form of ‘normality’. Lola suggests cycling to work if you feel confident enough (and if you don’t there are plenty of classes).
‘Not only is it great exercise and a perfect for our new socially distanced world, but often it can be so much cheaper than taking public transport in London – especially if your employer has a cycle to work scheme,’ Lola says.
‘I was able to reduce my monthly travel costs from £150 to just £35 – and after the first year when I’d paid the bike off, it was free!’
Don’t be too hard on yourself
Saving for a house can be daunting and – let’s face it, sometimes depressing. Try to give yourself the grace you deserve.
Mortgage Advice Bureau’s (MAB) recent study showed that almost a third of Brits try to cope with money problems alone, and nearly one in 10 would shut the problem away and try not to think about it for the time being.
Seek professional advice if you are feeling overwhelmed.
Psychologist, Kim Stephenson, advises that there are various charities and organisations offering free help and an opportunity to talk about any money problems you’re having.
‘Citizens Advice have specialist case workers who can help with debt management, there’s also Step Change Debt Charity and National Debtline,’ Kim says.
Iona echoes this view and suggests starting with just one major long-term lifestyle change you’ve been forced into during lockdown that has saved you a good chunk of money – choose the one you missed the most. For example, you may find that beauty treatments are actually an expensive placebo, as Iona noticed.
‘This may sound dull,’ Iona finishes ‘But as a lot of us have realised during lockdown, it’s time speaking to friends, getting stuck into an absorbing hobby, reading or enjoying/exercising outdoors, that gives us purpose.’