Saving for your first house? You could be missing out on £2,000 a year from the Government, expert explains

• A mortgage expert has explained how first-time buyers can boost their deposit when saving for a house
• He’s shared three top tips to ensure you save as much as possible
• He says many buyers get confused about free £2,000-a-year bonus and end up missing out

When looking for your first property you may think obtaining your deposit is a goal too far to reach, writes mortgage adviser Liam Cockerham.

It’s true that there is no one size fits all solution to magic up the deposit needed to get a mortgage.

However, there are some clever tips and tricks you can utilize in order to grow your pot quicker and get you into that home a lot sooner.

It is always important to work out your end goal before you start saving a penny. Otherwise it is like starting a race with no finish line.

You usually need a deposit of 5-10 per cent to get onto the property ladder.

The interest rate you pay on your mortgage depends on the loan to value of your property, therefore the bigger the deposit the lower the interest rate and monthly payment.

Below are my three top tips for achieving the deposit you need as quickly as possible.

Make the most out of a Lifetime ISA (LISA)

The lifetime ISA is a government-funded tool available to people aged between 18-40 who are first-time buyers.

The maximum amount you can deposit in one year is £4,000 and in return for this you will get a 25 per cent bonus from the government, up to £1,000 each year.

Now imagine you and your partner are looking to save for your first home and you both maximise your deposits in the Lifetime ISA for that year, suddenly your £8,000 has turned into £10,000.

However, it is also important to note that where I see most people get confused with this account is that you must have the account open and active for a full year before you can claim any bonus.

To withdraw your money it must be used to either put down a deposit for a home or you can take it after the age of 60. Otherwise you are liable for a 25 per cent penalty charge on the money in the account.

Start a savings plan

Starting and sticking to a regimented saving plan can speed your way to your deposit figure quicker than you can imagine.

Instead of putting away £100 here and £60 there, set an actionable goal every month to put away a certain amount of money each month into a savings account.

To save a figure of £10,000 would require putting away £167 a month for five years.

Visualising your goal and breaking down the numbers makes the impossible seem possible just by looking at it from a different angle.

Living at home

The rush to have your own space and somewhere to call home can be hard to resist.

However, before you race to get the keys to a rented home, just think what else you could be doing with your money.

Instead of being in the loop of renting and trying endlessly to save for a deposit, take a step back and look at the bigger picture.

A couple of extra years with your family is for many people the support they need to save hard and reach their goal sooner. Be disciplined and put what you would have spent on rent into a savings account.

If you can bank that £500 a month you could have a £20,000 nest egg in just over three years.

By following these three tips, you can hopefully start to set the seeds of your deposit bloom into a garden of opportunity and be ready to use this on your first home!

Liam Cockerham is a Sheffield-based mortgage adviser at Stagg Mortgage Services.

You can contact him at: [email protected].

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