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How to save up for a deposit for a house

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In today’s budget the Chancellor announced more support for people wishing to buy their own homes, but will it make things easier for you and how can you go about saving up a deposit of your own?

The additional support for would-be home owners comes in two forms.  Firstly the New Buy scheme is being expanded.  This scheme helps buyers secure a mortgage by reducing the level of deposit that you have to raise on your own.

It’s effectively an interest free loan from the Government which you can put towards your deposit and pay back when you sell the house.  This scheme will be available to anyone buying a new home under £600,000.  The second support mechanism will be launched in 2014 nd will be a guarantee provided to banks against mortgages, effectively allowing banks to reduce deposits to 5% without taking on so much risk.  Think of it as an insurance policy for banks.

So where does this leave you?

If you are thinking about buying a house you will likely still have to raise some kind of deposit – whether it’s 5% or 25% – so how do you go about saving this?

One way is to get an ISA in each tax year so you can put your savings into an interest free savings account.

For 2013/14 the annual ISA investment allowance will be  £11,520, of which £5,760 can be saved in a cash ISA and the remainder  can be invested in a stocks and shares ISA.  If you do not use your ISA allowance for a given year then you lose it, so it can be prudent to use your allowance each year to maximise your tax free savings.

 

 

 

 

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6 Responses to “How to save up for a deposit for a house”

  1. johnbartram says:

    Buying a house is exciting and life-changing.What’s not as much fun is saving for the deposit.There are many ways to save for a home that don’t require major changes to lifestyle. The first thing we consolidate all our savings into one account so we could see exactly what we had and see it grow on a month-to-month basis. It really helps you focus when it’s all in the one place.

  2. adam says:

    very informative blog, thanks

  3. James Cooke says:

    It’s so tough getting on the ladder today. “Generation rent” is a phenomenon of the noughties that looks set to be around for the next two decades – maybe longer.

    For me saving was about staying focused and being really disciplined – you just have to give up the going out. Oh and keep monitoring your progress – it really keeps you motivated as you watch that deposit slowly build.

  4. Deposits have to be one of the main barriers for first time buyers. It great to see the government are trying to find solutions to this problem. It will be interesting to see how many housing developers get involved with this scheme.

  5. Ha, once again a great post, i’m really starting to follow this blog, iv’e also recently been advising people to do the exact same thing in relation to saving, once again thanks for a great post.

    Denny

    p.s were you aware you are currently ranked #23 in top 100 real estate websites?

  6. Lauren says:

    I’d agree that getting an ISA is a smart move. I’d also agree with James that monitoring your progress is really important – it’ll help to keep you motivated and on track!

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