Finding the money for a deposit is the biggest obstacle facing first-time buyers. With house prices still rising, though more slowly in some areas than before, the challenge in finding finance for your purchase remains.
Help to Buy has been a boon to thousands, but there are some, more innovative ways to fund your first home.
We take a look at five smart ideas for quickly coming up with the cash you need to buy a property for the first time.
Make sure your savings are in the best place to get you a good return. An ISA lets you save up to £20,000 tax free in any one year. Shop around for the account offering the best return and make sure you’re not locked in so you can withdraw your funds when you need them. First-time buyers can open a Help to Buy ISA and the Government will boost your savings by 25 percent, up to a maximum of £3,000. Couples can each have a Help to Buy ISA, doubling your tax-free bonus. You can’t open another ISA in the same financial year that you start with a Help to Buy one.
Crowdfunding: Using the Internet to persuade others to invest in your dream has become a hugely popular way of raising cash quickly. And there are now a number of crowdfunding platforms that offer people a way to buy a home. The idea is that you join other people in buying property, usually buy-to-let, and get a return on rent and a share of the property’s value when it is finally sold. While property prices continue to rise, joining a property crowdfunder could be a faster option than simply putting money into a savings account. There are downsides, too – you have no control over how a property is managed, your cash will be locked in and you take a risk that your investment will pay off.
Two heads are better than one. And two incomes and savings are much better than one. Investing with a friend is a common and very practical way to get on the property ladder. Set some ground rules before you start. You obviously need to like and trust each other because you’re going to be financially dependent on each other. But you should also talk frankly with a lawyer to draw up an agreement that sorts out any potential issues down the road.
Buy the place you’re renting if you like living there. A big plus is that you’re already living there and won’t have to move, saving cash on a removal. You already have a relationship, albeit a business one, with your landlord. Check out what similar properties are selling for locally and if it’s in your price range, then sound the landlord out about the possibility of buying.
Save yourself cash on rent that you can tuck away by becoming a property guardian. The owners of vacant or listed property are always on the lookout for tenants who can move in and ensure their property is kept in livable condition and safe from vandals and squatters. The big advantage for you is you will be living in a decent place but paying only a peppercorn rent.