Becoming a homeowner is still a top financial goal for many people, especially in Great Britain. According to YouGov research, 62% of people who don’t yet own a home would like to. But it can often feel like a goal that’s out of reach, particularly in the current cost of living crisis – when we have less disposable income to save and mortgage interest rates are rising.

The good news is that even in the current market, there are some simple steps you can take to make getting on the property ladder easier. Here’s our guide to buying a home during the cost of living crisis.

 

Where to start with saving a deposit 🤔

Our top tip is not to overextend yourself financially by putting all your savings towards a deposit. First, make sure you’ve got an emergency fund in an accessible cash savings account, in case of any unexpected costs. The general rule of thumb is three to six months’ worth of essential expenses as a cash cushion – this amount will be different for everyone.

Next, you might want to consider a deposit-boosting Lifetime ISA. You get a 25% government bonus on all contributions, and you can contribute up to £4,000 each tax year. That means you could get a bonus of up to £1,000 every year, for free! So, even if you can only save a few pounds right now, you’ll still get a bonus to help you on your way.

Depending on when you want to buy your home and your risk appetite, you can choose between our Cash Lifetime ISA and our Stocks & Shares Lifetime ISA. Our Cash Lifetime ISA has been singled out as one of MoneySavingExpert’s top picks and gives you a competitive interest rate on top of your bonus, while the stocks and shares version invests your money in the stock market.

 

Learn more about the Moneybox Lifetime ISA

 

Set a sustainable savings plan 💪

Everyone has a different budget and preferred way of saving – that’s why we offer a range of ways for you to top up your savings accounts. Take inspiration from our Lifetime ISA customers, who have recently been changing up their payment settings.

This year, we’ve seen even more of our customers use automatic, recurring payments to top up their LISA savings by setting up a weekly deposit or payday boost. Do you prefer saving when it suits you? You can also add a one-off deposit whenever you like.

If making a recurring payment or adding a lump sum feels unachievable, our round ups feature also makes it possible for you to save your spare change without even thinking. You can round up your everyday purchases to the nearest pound and deposit those round up amounts into your LISA – you’ll be surprised by how much this adds up to over time!

 

Saved your deposit already? 💰

If you’ve saved your deposit but feel nervous about buying a home, think of your property purchase like any other investment. When viewing properties, look for places you’d be happy to live in for an extended period of time – ideally longer than five years.

That way, if the property market does cool off and house prices fall in the short term, you can relax in the knowledge that you’ve got time on your side and prices will eventually rise again.

Worried about rising mortgage interest rates? They’re still relatively low compared to how high they used to be, and we often see rates slightly decrease a few weeks after they rise, as lenders compete to attract new customers.

The key thing is to make sure you have a great mortgage broker in your corner – like one of our friendly Moneybox Mortgage Brokers. They’ll scan the market to help you secure the right mortgage for you across thousands of deals, then quickly get your application underway – free of charge.

 

Learn more about Moneybox Mortgages

 

Also, be prepared for lenders to take rising costs into their calculations when they’re working out how much they’ll lend you. They’ll want to see a minimum of three months’ worth of bank and savings account statements, to calculate if your budget could absorb rising costs in future. So, be extra careful with your budgeting right before you apply for a mortgage!

 

Focus on the things you can control 🔮

No one can accurately predict the future of the housing market, so if you know you want to buy a home one day, focus on what you can control. These include things like setting up a savings plan that works for your budget, making the most of the Lifetime ISA government bonus, and building saving habits that you can stick to when times are tough.

The economy is cyclical, so it’s possible that the housing market might look very different by the time you’ve saved your deposit and are ready to buy. So, even when your income is squeezed, remember that the little steps you take could add up to big wins – like your first home.

 

 

A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA. With a Stocks & Shares Lifetime ISA, your capital is at risk.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Moneybox Mortgages is provided by Moneybox Mortgages Ltd.