As UK Savings Week takes place this week, it’s a timely reminder for aspiring homeowners to make every pound saved towards a house deposit work as hard as possible.
How much do you need to save?
- 5% deposit on the current average UK house price of £272,000 would be around £13,600.
- In London, where the average price is £554,000, a 5% deposit would be £27,700.
- In Yorkshire and Humber, where the average price is £208,000, a 5% deposit would be £10,400.
- On top of any house deposit, you also need to cover any legal fees, a valuation and survey, plus moving costs, which could be anything from £1,500 to £5,000 for buying, depending on whether this is a lower or higher end move, basic or full survey, so mid-range would be £3,250.
“As a rough average the total amount needed to cover all costs works out at around £16,850, so if the plan is to save this over five years, you need to put aside £280 every month. However, the right account and determination to boost this amount could drastically change the time it takes.”
Which savings accounts could help?
“There are several types of savings products you could consider when building your house deposit, including a Lifetime ISA, easy access account, regular saver and Cash ISA.
“Due to the differing deposits you might put aside every month, say if you are hit by an unexpected bill, an easy access account might be the most flexible choice. Another option could be a notice account, but these have various restrictions or access limits so might not be suitable if you suddenly need your house deposit immediately.
“A Lifetime ISA is a stand-out choice, thanks to a bonus paid by the Government at the point of buying your first home. If a better rate appears elsewhere while you are saving, you could look at an ISA transfer, just keep in mind that not every provider permits this option.”
How to use a Lifetime ISA to reach your house deposit goal sooner
“If you are eligible, open a Lifetime ISA early, as it must have been open for at least 12 months before you can use it to buy your first home. Save what you can each month, up to the £4,000 annual limit, and the Government will add a 25% bonus, up to £1,000 a year.
“If you contribute the maximum for three years, you could build a £15,000 pot, which includes £3,000 in bonuses.
“The key is to look at how much you can realistically save each month, how soon you might need the money, and which account is most suitable for your circumstances. This becomes an even greater challenge if a large part of your income is covering private rental costs, so always get independent advice to help you build a clear and realistic path to owning your first home.”
Originally provided as a post for the UK Savings Week website. UK Savings Week is created and run by the Building Societies Association.
As UK Savings Week takes place this week, it’s a timely reminder for aspiring homeowners to make every pound saved towards a house deposit work as hard as possible.
How much do you need to save?
- 5% deposit on the current average UK house price of £272,000 would be around £13,600.
- In London, where the average price is £554,000, a 5% deposit would be £27,700.
- In Yorkshire and Humber, where the average price is £208,000, a 5% deposit would be £10,400.
- On top of any house deposit, you also need to cover any legal fees, a valuation and survey, plus moving costs, which could be anything from £1,500 to £5,000 for buying, depending on whether this is a lower or higher end move, basic or full survey, so mid-range would be £3,250.
“As a rough average the total amount needed to cover all costs works out at around £16,850, so if the plan is to save this over five years, you need to put aside £280 every month. However, the right account and determination to boost this amount could drastically change the time it takes.”
Which savings accounts could help?
“There are several types of savings products you could consider when building your house deposit, including a Lifetime ISA, easy access account, regular saver and Cash ISA.
“Due to the differing deposits you might put aside every month, say if you are hit by an unexpected bill, an easy access account might be the most flexible choice. Another option could be a notice account, but these have various restrictions or access limits so might not be suitable if you suddenly need your house deposit immediately.
“A Lifetime ISA is a stand-out choice, thanks to a bonus paid by the Government at the point of buying your first home. If a better rate appears elsewhere while you are saving, you could look at an ISA transfer, just keep in mind that not every provider permits this option.”
How to use a Lifetime ISA to reach your house deposit goal sooner
“If you are eligible, open a Lifetime ISA early, as it must have been open for at least 12 months before you can use it to buy your first home. Save what you can each month, up to the £4,000 annual limit, and the Government will add a 25% bonus, up to £1,000 a year.
“If you contribute the maximum for three years, you could build a £15,000 pot, which includes £3,000 in bonuses.
“The key is to look at how much you can realistically save each month, how soon you might need the money, and which account is most suitable for your circumstances. This becomes an even greater challenge if a large part of your income is covering private rental costs, so always get independent advice to help you build a clear and realistic path to owning your first home.”
Originally provided as a post for the UK Savings Week website. UK Savings Week is created and run by the Building Societies Association.
