With rents now rising by an average of £300 per year, according to housing charity Shelter, theres never been a better time to start putting money aside to buy your own house. Shelters figures showed that rents rose by more than £500 annually in one in seven local authorities last year, while six areas showed equivalent rises of a massive £1,500 or more.
With rents now rising by an average of £300 per year, according to housing charity Shelter, theres never been a better time to start putting money aside to buy your own house. Shelters figures showed that rents rose by more than £500 annually in one in seven local authorities last year, while six areas showed equivalent rises of a massive £1,500 or more.
As a result of these rent increases, almost three-quarters (72 per cent) of renters say they can only put aside £50 a month or less in savings. However, for those who can afford to do so, the news may act as a stimulus to start putting money aside and escape the trap of rising rents.
Raising a deposit is tough, particularly in the current climate, so its important to tap into all the resources you can when saving. You will usually aim to raise at least a deposit of 15 per cent (thats of the total value of the house you want to buy), but 25 per cent is best for when it comes to securing a mortgage. You dont have to have found your dream house yet – just start saving so the money will be there when you do.
Some people are fortunate enough to be able to get a loan or a kick-start from their parents, which will make the target much more achievable. Dont worry if you cant get this, although it may help to have a bit of a clear-out of any clutter you have – old TVs or unneeded appliances can be sold through websites like eBay or Gumtree at a good price, and will give you a much-needed head start toward your goal.
For most people, however, raising a deposit will involve opening a savings account at some point. Make full use of your ISA (Individual Savings Account) allowance – the current ISA limit is £11,280, although it is expected to rise to £11,532 this April. Half of this amount can be put into a tax-free cash ISA, which will shelter the interest you earn from income tax. Additionally, some banks or building societies may offer special products geared toward those who are saving up for a home.
Its best to steer clear of investments or short-term loans when saving for a deposit. Investments run the risk of falling in value, while short-term loans should only be seen as a last resort – although if used sensibly, they can be helpful if you just need a last-minute push to meet your deposit goal. However, its best to keep things slow and steady if you can. Be diligent and save as much as possible – youll meet your target sooner than you think!
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