How to save for that all-important house deposit

In this month's edition, we're on hand to offer our guidance to those looking to save for that vital first deposit on a house. 

There's also news of an increase in mortgage approvals with Brexit looming, we reveal the top places to live in the UK and question whether landlords should allow pets in their properties. 

How to save for that all-important house deposit

 

For most of us, the most expensive thing that we ever purchase will be a property, and the prospect of saving for that all-important deposit can be rather daunting. However, the key to saving for that lump sum is simply good financial preparation and making a few changes to your outgoings which should reap big rewards. Take a look through our handy hints and tips and you’ll be in that new home in no time.

Speak to an expert
If you have made the decision that you are ready to buy a property, then an excellent first point-of-call would be to speak to an expert, be that a financial planner, mortgage advisor or a savings expert in your bank. It is important to get a detailed overview of your personal finances and speaking to an industry expert will provide you with tailored advice which suits your lifestyle, as well as being given some proven strategies to help you to save. Whether you’re a saver or a spender, it is important to get into the right mindset to save and starting the process by speaking to an expert is a sensible first step.

Make a move
With the cost of renting often leaving many with little money to save for a deposit, making a temporary move can be a key factor in achieving a sufficient deposit. More and more people are moving back in with their parents for a period of 6 to 12 months; often paying no rent and economising through saving on laundry and food costs. If living with your parents is a truly unbearable prospect, then finding a lodger to live with you will also aid you in that all-important quest for a deposit.

Know your options
Did you know that you could buy a property with just a 5% deposit? Knowing what schemes and grants are out there will most certainly help you to achieve a house deposit. The Help-to-Buy shared equity scheme allows you to purchase a home with as little as 5% deposit and the government or developer (this is available for new homes only) lends you the rest of the deposit. Shared ownership schemes involve purchasing part of a property and then renting the rest, and although you would still need a deposit to get a mortgage for the part of the property you are buying, the deposit would be considerably lower; for example, to get a 90% mortgage on a 50% share of a £150,00 property, you would need only £7,500 for the deposit.

Make your savings work harder
Naturally, any changes you make will have one similar goal – to help you in saving more money more quickly and making these savings work for you should be a top priority. Open an ISA and use your yearly cash allowance so you don’t pay unnecessary tax; there is also a Help-to-Buy ISA from the government where for each £1 you save the government will give you 25p. If you don’t already have one, open a savings account and save what you can, even if you think the amounts you are saving are inconsequential, they will soon amount to a worthwhile value. Shop around and see which bank offers the best interest rate on your savings, don’t just take one out with your current banking provider as finding a good interest rate could go a big way to helping you reach your goal faster.

Saving for a deposit can seem like a tall order, so making some sound financial decisions will be the key into being approved for a mortgage and taking a step on to the property market. Get yourself into the right mindset where you are aware of why you are making some financial changes, remember that they are all short-term, and you’ll see those savings growing faster than you could have ever hoped.

Buyers rushing to beat Brexit: mortgage approvals increase

 

Research from chartered surveyor e.surv has shown that mortgage approvals reached a peak of 66,390 in December of last year, which amounts to a 7.8% annual increase. This seasonal rise has led to claims that there is a pre-Brexit rush to purchase property, and that the political uncertainty arising from the imminent break with Europe is actually fuelling current demand in the property market.

Commenting on the figures, Richard Pike, sales and marketing director for Phoebus Software, said: 

“It is hard to talk about anything at the moment without mentioning the ‘Brexit’ word: it is all-consuming and there is little doubt that it continues to affect the housing market. The fact that house purchase approvals were up in December suggests that people are planning ahead and making their move before the March deadline. Interestingly the number of remortgage approvals took a dip compared to the same month in 2017, which bucks the trend throughout the rest of the year. Nonetheless, I would expect it to be the remortgage sector that will be keeping the mortgage market going in the coming months, as we wait to see how our exit from the EU pans out.”

Throughout the year, the types of mortgages being approved also reflected the influx of first-time buyers in the property market, with mortgage products offering loans at 95% of a property’s value increasing in popularity.

Data showed that over a quarter of mortgages approved in December were taken out by borrowers with a small deposit (less than 20%), and this was also the case in November. A key step-change in property has been the introduction of government schemes in order to alleviate the headache of saving for a deposit, and these statistics show that this is having some success in the marketplace.

Tony Sutton, managing director of mortgage brokerage group Specialist Financial Services, said lenders have become more competitive as they seek to protect their market share.

Mr Sutton said: "There is a wider choice of products available, serving a broader range of people with more sensible underwriting decisions. Lenders are trying to maintain market share and have increased the terms they are willing to offer."

Such an increase in mortgage offerings has clearly made the process of gaining a mortgage easier than ever before – with some lenders even offering 100% mortgages on properties in an effort to maintain their place in the marketplace. With more options available offering more flexibility, it is no wonder that mortgage approvals have increased, which bodes well for the year ahead for property sales.

Revealed: the best places to live in the United Kingdom

 

Ever wondered how your local area stacks up against the rest of the country when it comes to quality of life? Well, Halifax have done the hard work for you and revealed which area in the country deserves the title of the best place to live in the United Kingdom as decided by their annual Quality of Life survey.

Having been close to the top of the table for the last two years running, the Orkney Islands, located at the very top of Scotland has taken this year’s crown. The decision is made based on a range of criteria, including housing, education, opportunities for work, health and how the residents of that particular area feel about the place that they call home. Orkney fared particularly well in all aspects, as you can imagine, with a low crime rate and strong exam results to boot.

The entirety of the top five this year is located above the capital or in the North, with a shift away from locations in the South East and West in the very top tier. This is down to better housing affordability, less crime and quieter roads as compared with the South of England.
The survey’s top ten is as follows:

1. Orkney, Scotland
2. Richmondshire, Yorkshire and the Humber
3. Rutland, East Midlands
4. Hambleton, Yorkshire and the Humber
5. Eden, North West
6. South Oxfordshire, South East
7. Cotswold, South West
8. Ryedale, Yorkshire and the Humber
9. St Albans, East of England
10. Derbyshire Dales, East Midlands

Managing director of Halifax, Russell Galley, offered the following: "Orkney has consistently been considered one of the best places to live in the UK and Orcadians will be delighted to hear they have now taken the crown.

"Its remote location may not be for everyone, but this comes with the benefit of having high employment, low crime rates, smaller class sizes and more affordable housing. While the South East continues to have the most locations in the top 50, we've seen northern areas perform particularly well on education, while they also benefit from lower house prices when compared to average earnings."

To view the top 50 and find out if your area has a spot in the prestigious list, click here!

Should landlords consider allowing pets in their homes?

 

Britain is, without doubt, a nation that loves its pets, and the pet population continues to grow; homeowners around the country have brought many types of animal into their home, from dogs and cats to birds and hamsters.

Given that the latest data suggests that 45% of British residents own a pet of some description, it’s surprising that the stance from landlords on pets in rented accommodation seems to have remained unchanged.

There are some understandable reasons behind that, of course; even the most well-behaved pets can have their accidents and depending on how responsible the owner is, they can be quite destructive.

However, a new study conducted by LSL Corporate Client Department surveyed over 3,200 people throughout the UK on pets in rented accommodation has revealed that it may be time for landlords to make some exceptions.

This survey asked its participants if and just how much they would be willing to pay to have a furry friend in the place that they are renting and the answers suggested that landlords could be missing out on some extra income, should they wish to be flexible.

31% of the 18-35-year olds surveyed are willing to pay more for their pet and would offer £25.55 extra a month on average for the privilege. This could mean as much as an average of £300 extra annual profit, so could landlords be persuaded to allow pets, providing that a deal is structured to cover the potential cost of any damages?

Elsewhere, some differences seen between male and female tenants were thrown up, with 31% of women prepared to pay more in comparison to the 23% of men willing to do the same.

Whilst the rented sector may be hesitant to adopt a more flexible approach, there has already been some movement in this direction from the build to rent sector; some developers are looking to create pet-friendly 1-bedroom units that come with a garden, for example.

“Our research clearly shows that being able to live with a pet is a huge incentive for some tenants" offered Martyn Alderton, National Lettings Director at Your Move. For example, landlords could request a slightly higher deposit, six weeks instead of the usual four, to protect the property. Or, as this research shows, they could consider increasing the monthly rent slightly to cover the cost of any pet-related damage.”

Many believe that there is huge potential for landlords to increase their income by structuring a lettings agreement that allows pets but also works for them. This is an opinion shared by CEO of DogFriendly, Steve Bennet: “One of the most common questions that we receive from dog owners is where can they find private landlords who will allow dogs? I know from personal experience that having a dog, or as in my case, dogs, the choice of properties available to my family was severely restricted.

“Accommodation suppliers who welcome dogs tell us that dog owners usually take more care of their rooms and their properties than non-dog owners – so it really is time for landlords to recognise that one in three households own a dog, which is a massive potential market, too many landlords are still ignoring”.