Saving up for a house deposit is difficult. Growing your savings while paying rent (that’s probably more than your mortgage is going to be) is an even bigger challenge. And unless you’re part of the 25% of people being given a leg up onto the property ladder by their parents, you’re probably not going to be handed a wodge of free cash to help you out.
Or are you?
I accumulated most of my half of our £60,000 deposit the normal way, through working and being stingy, but I actually was given the rest. Not by my parents or winning the lottery, but successfully (and legally) scamming the government, banks, credit cards and the Student Loans Company out of ten grand.
Want to know how?
Help to Buy/LISA bonus
£3,123.09 (mine) + £2,900 (my boyfriend’s)
If you’re a first time buyer I 100% recommend opening either a Help to Buy ISA or a Lifetime ISA. It’s a bit of a no-brainer. Get one of these and Theresa May will personally hand you 25% extra on top of what you saved.
MoneySavingExpert has a really good guide to these accounts, and the pros and cons of either one – it’s worth doing your reading about them, as pay into one account and need to withdraw your money for something else and you could make a loss.
I’m pretty proud that when I cashed in my LISA I probably bagged the biggest bonus in the country at the time. I opened my Help to Buy account as soon as they were available (1/12/2015) and maxed out my contributions and got the highest interest I could. When the first cash LISA came out I transferred over my H2B account because you can put an extra £1600 a year into it, and I kept up with hitting my contribution limits.
Possibly the biggest “trick” to these ISAs that isn’t opening one early, is getting the person you’re buying a house with to get one too. It took my boyfriend 6 months to come around to the idea, which is why his bonus isn’t as high as mine, but it almost doubled our free money.
I’ve been keeping track of my interest from bank accounts in a nerdy spreadsheet for three years. However, I’ve actually been saving for longer than that, so the real figure is probably a little bit higher. I’ve tried my best to move my money around in a way that allowed me to squeeze the absolute maximum interest I can out of my savings. Now basic rate taxpayers no longer need to pay tax on interest earned, provided it’s less than £1,000 a year, it’s well worth looking at all types of accounts, not just ISAs.
Depending on how much time and effort you’re willing to spend researching accounts and setting up direct debits and standing orders, you could be earning up to 5% on your savings.
If any of your savings (or even the money in your current account) is accruing less than 1% in interest then you’re missing out on easy money. You deserve the best rates on the market!
The site bankaccountsavings.co.uk is an amazing resource for finding out the best deals to be had out there, and they explain all the terms and conditions to follow to actually get the interest. Just type in the amount of money you have, and they’ll show you where to put it.
If you want to hear about new account releases – someone’s usually posted the ones worth knowing about in the UK Personal Finance subreddit.
Don’t do anything just yet though! Read the next point in this list…
Bank referrals and other bonuses
Different banks are always offering switching bonuses or referral bounties. Even if the account is pretty pants, getting £200 for moving your money over to a new bank for a couple of months is more than you’d earn as interest in even the most generous account.
Sometimes you need to be referred by a friend to get a bonus, and both of you get paid. In the words of an early 00s CBBC programme, ker-ching!
I’ve used the current account switching service three times and it’s really easy. All of your direct debits move over with your money, and even if something gets paid into your old account by accident it’ll automatically be added into your new one. It only takes 7 working days to completely switch. I also earned £5 a month on one of my accounts just for having two direct debits come out of it, so look out for perks like that.
It’s worth noting that it’s completely legal to have multiple current accounts. I have six right now. As it stands, banks aren’t offering attractive rates in their designated savings accounts, but by splitting my money into chunks of £1,500 – £3,000 and placing it into the most rewarding current accounts, I’m doubling the interest rate I’d get in “savings”, and ALL of my money is easy to access.
Some credit cards also offer referral/new customer bonuses – I’ve had £15 in Tesco Clubcard points, £30 in M&S vouchers and £20 cash for getting new credit cards, as well as £100 in cashback for spending £2,000 in the first three months of having my Amex.
Not paying stamp duty
Very recently the government has stopped charging first time buyers stamp duty on properties under £300,000 , which saved us £2,100 vs what we would have paid before last year. (I know this isn’t really free money, but it made a difference!)
Student loan refund
This won’t work for everyone, but it hit the news in the past few months that thousands of graduates have overpaid their student loan by starting to repay it too early. You should only be paying back your loan (if you earn enough) from the April after you graduate.
I remember watching my boss tick the wrong box on the form when I got my first graduate job and I was too nervous to say anything about it. I claimed the money back five years later, and it only took one phone call, so it’s worth checking if you think something like this might have happened to you.
Pretty impressive, right? In some parts of the country, that’s more than enough for a 10% deposit.
The government has introduced quite a few schemes in the past couple of years to encourage people to become first time buyers, but they don’t make it easy for you to actually access that money. I thought it might be eye opening to show you what I ended up pocketing, as I’ve not seen many people break down where their deposit came from like this.
I saved more than £20k the old fashioned way, which is how I managed to bag such a juicy LISA payout, and make all that interest, but even if you’re saving up at a slower rate, maybe some of the things that worked for me, might work for you. Clearly, I’m not a financial advisor, so do your own research too, as always.
If you’re saving up for a deposit, and that’s how you got here, good luck!