New year, new home? Tips for first-time buyers in 2024
5 tips for first-time buyers to make your money go further.
We’ve all been guilty of setting ambitious New Year’s resolutions and not seeing them through.
But if 2024 is the year you want to tick “become a homeowner” off your list, here are 5 tips for first-time buyers to help make your money go further.
1. Boost your savings with a lifetime ISA
Lifetime ISAs (or LISAs) are a type of individual saving account for either your first home or retirement. You can deposit up to £4,000 a year into your LISA and, as well as earning interest on your balance, the government will top up your pot with a free 25% bonus. That’s £1,000 every tax year, if you deposit the full £4,000.
You must have your account open for a minimum of 12 months before you’re able to use the funds. But, as your allowance refreshes every tax year, if you open a LISA before 5 April, 2024 and deposit £4,000, and then add another £4,000 over the following 12 months, you’d have earned a free £2,000 boost from the government by April 2025.
It’s vital you understand the rules before you dive in, especially as there are fees for withdrawing at the wrong time (your LISA funds are solely for buying your first home, or retiring). When you’re ready to buy your first home, your LISA funds will be paid to an eligible conveyancer, and can only be used directly towards the purchase of the property (so not on stamp duty or conveyancer’s fees, for example).
2. Diversify your savings
Since LISAs can be a bit inflexible when it comes to withdrawing money, it’s helpful to diversify your first-home savings with an instant-access savings account. That way you’re covered if you need a quick hit of cash. And between movers, stamp duty, solicitors’ fees, emergency wine (the list really is endless!), trust me, you will need a quick hit of cash – and often!
When we checked (January 10, 2024) Revolut was offering interest up to 4.75% (AER) on its savings account. The first direct Regular Saver offers up to 7% (AER) and is available to those with a first direct current account. Kroo (4.25% AER) and Starling (3.25% AER) offer interest on your current account balances, so you wouldn’t even need to set up a separate savings pot to earn a little extra.
3. Take advantage of a first-time buyer scheme or incentive
There are several schemes and incentives that first-time buyers can use in 2024.
The mortgage guarantee scheme, which enables lenders to offer mortgages up to 95% of the property’s value, was extended in the 2023 Autumn Statement until June 2025. And the stamp duty threshold for first-time buyers, which was raised from £300,000 to £425,000 in September 2022, shows no sign of changing soon.
There are also help-to-buy or shared ownership options, or that rare beast, the 100% mortgage (which typically needs a family member to be your guarantor). It’s important to bear in mind, though, that many schemes and incentives come with limitations on the type or price of property you can buy, additional fees or higher risks.
4. Don’t try to play the market
We all want to get on the ladder at exactly the right time, but even the most experienced property investors can’t predict the market. The right property is a balancing act of affordable price, decent mortgage rate and your must-haves. Plus, if you need somewhere to live urgently, waiting for rates or prices to drop might not even be an option.
With rates changing quickly, it pays to thoroughly compare mortgages and their rates. And whether you want to DIY your mortgage application or use a broker, always do your own research to make sure you’re getting the best rate for you.
5. Create a hypothetical budget for your new home-owner self
Before applying for your mortgage, create a thorough budget as your hypothetical new home-owner self, accounting for the mortgage payments, bills and any new expenses you expect to pay. Not only will this help you understand how much you can afford to borrow, it’ll show you where you can cut back and prepare you for your new responsibilities.
Getting your first place can be scary, but knowledge is power!
About the author
Louise Bastock is an editor at Finder, specialising in a broad range of personal finance topics, from financial wellness to first-time buyers. As video manager, she’s also responsible for presenting and producing the UK’s video content across multiple channels, including YouTube, TikTok and Instagram.
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