In this exclusive Q&A, we’ve teamed up with Mr Money Jar to answer some of your top questions on home-buying and get his valuable insights on saving for your first home. Whether you’re a first-time buyer or a home mover, these expert-recommended tips are for you. For more personal finance tips, check out the full Q&A with Mr Money Jar.

What savings account can I use to save up for a deposit?

There are lots of saving and investing accounts out there to choose from, but one account that will give you a great return is a Lifetime ISA (LISA). The LISA is a government scheme designed to help you buy your first home or save for retirement. You can contribute up to £4,000 per year and get a 25% government bonus of up to £1,000, making it a great tool for reaching your homeownership goals!

Keep affordability in mind, as the £450,000 property price cap can be limiting in certain regions like London. Despite the economic challenges, many people are still achieving their homeownership goals so opening a LISA early, even with a small amount, can still help you save for a deposit. Finally, remember that the LISA does have a 25% penalty for withdrawals made for reasons other than buying your first home or retirement.

Open a Moneybox Lifetime ISA today.

Govt. withdrawal charge may apply. ISA and tax rules apply. For Stocks & Shares LISA, capital at risk. Other accounts are available.

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When is the right time to buy?

There’s always going to be external factors like stamp duty changes and interest rate fluctuations that will influence your decision to buy a home, but ultimately it comes down to your personal situation and long-term goals. Focus on finding a property you can afford, in an area you want to live in, and work with trusted professionals like a mortgage broker and solicitor to navigate the process.

Don’t let market fluctuations deter you – if it fits your budget and life plans, taking the leap onto the property ladder could be a great decision. Plus, once you’ve bought your first home, you can start building towards other financial goals, including investing and saving for life insurance.

 

How early do I need to start speaking to a broker before I plan to buy a house or get a Mortgage in Principle?

There’s no harm in doing this early. You can start the process from a year in advance, by getting a mortgage estimate using a mortgage calculator or Mortgage in Principle, which can help demonstrate your credibility as a buyer to potential sellers.

Speak to a broker when you’re about to view properties. They can provide invaluable guidance on budgeting, credit scores, and even help you get an accurate estimate of how much you can borrow.

A good mortgage broker simplifies the often complex process, helps you understand the jargon, and ensures you have the necessary documentation in order. Even if you’re aiming to buy later in 2025, starting the process early is beneficial. Having a Mortgage in Principle not only strengthens your position but also gives you a clearer picture of your budget. We even saw Mortgage in Principle applications at Moneybox on Christmas and Boxing Day, suggesting home-buyers are prioritising their goals, even at this time of year!

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I’m still a few years away from buying – what steps can I take in 2025 to get my finances in good shape?

It’s never too early to start focusing on your creditworthiness. When you apply for a mortgage, lenders will check your financial history and typically review the last three months of bank statements. So, make sure to manage your finances responsibly and ensure you’re on top of your spending and any debt.

Pay attention to “buy now, pay later” schemes as these types of purchases act as a mini-loan, reducing your disposable income and potentially affecting your ability to take out credit. This can negatively impact both your bank statements and credit score. Keep an eye on such purchases at least six months before applying for a mortgage. Educating yourself about these and other factors that influence your borrowing capacity is essential for a smooth mortgage application process.

 

Other than the Lifetime ISA, are there specific mortgage schemes or government incentives I can use to increase my buying power?

The government offers a few initiatives including the First Homes scheme which offers first time buyers 30% to 50% off the market value of a new-build home. There’s specific requirements to qualify for this scheme and a limited number of properties available, but it can be helpful. Another useful government scheme is the Mortgage Guarantee Scheme, which is designed to help increase the supply of 5% mortgages to first-time buyers. There is a deadline of June 2025 for this scheme, so you’ll need to act quickly if you want to take advantage of it. In addition, there are several other schemes you can look into like Shared Ownership, Help to Build, 100% Mortgages and Rent then Buy, so it’s worth checking each to see what’s best for your situation.

 

What additional costs should I budget for when buying a house?

There are two major types of costs to account for when buying a home – upfront costs and recurring costs. The largest upfront cost is likely to be your deposit, but in addition to this you should factor in stamp duty, valuation fees, mortgage broker fees, arrangement fees, legal fees, surveys, CHAPS fee, estate agent fees and moving costs. The biggest recurring costs will be your mortgage repayments, and the other costs to consider include insurance, council tax, utilities, leasehold charges and government equity scheme costs. Find out more detailed information on each cost in our guide on the cost of buying a home.

 

Should I prioritise overpaying on my mortgage or saving money?

This is a very personal decision and depends on your priorities. Some people prefer to be mortgage-free sooner, while others would rather build up a savings buffer.

The benefit of overpaying on your mortgage is that you could shorten your overall mortgage term, meaning you may pay less interest and be mortgage-free faster. However, it’s a good idea to compare savings rates to decide if your money would be better spent on building up savings. Plus if you have high interest debt alongside your mortgage, consider prioritising paying this down first.

You can also use a mortgage overpayment calculator as a guide to figuring out how much you want to overpay. While most lenders will allow you to overpay 10% annually, always check if you can do this without a penalty. If you have the cash, an emergency fund and other savings, then overpaying your mortgage with any extra disposable monthly income you have could be beneficial.

 

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

Tax treatment depends on individual circumstances and may be subject to change in the future.

Remember: if you opt for the Stocks & Shares LISA, you’ll be investing, so your capital is at risk. All investing should be regarded as long term. The value of your investments can go up and down, and you may get back less than you invest.