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Property prices for April were released yesterday and while the figures themselves may or may not be that impactful, the return of the index overall has been welcomed as a sign that a certain level of normality is returning. The statistics themselves revealed that the average price of a property in the UK was £234,612 for April, with the annual price change increasing by 2.6 percent.
Islay Robinson, the Group CEO of the mortgage broker Enness Global, commented on what the return of the index means for mortgage holders: “Although today’s house price figures shine a light on a pre-lockdown market, the return of the UK house price index will be welcomed, if only as a sign of returning normality within the industry.
“With lending rates remaining favourable, the nation’s homebuyers continue to fund the majority of their purchases via mortgage lending, albeit the recent lockdown saw a reduction in consumer demand as many understandably waited out a period of uncertainty we’ve never experienced before.
“That said, by the time any decline does reveal itself, the swift market turnaround spurred by pent-up demand and further stoked by a stamp duty holiday, will have ensured that any decline in prices is short-lived and quickly resigned to the history books.”
As Islay alluded to, savers and would-be mortgage applicants may feel apprehensive about their finances at the moment, with this being made worse by news of the UK entering into a recession.
Saving for a deposit, let alone saving money at all, can be a daunting endeavour at the moment but fortunately, support and advice is regularly offered by experts in the field.
Brian Murphy, the head of lending at Mortgage Advice Bureau (MAB), recently shares his “five top tips” for maximising savings.
The first tip concerns an element of financial planning which everyone is aware of but is difficult to manage all the same:
As Brian explained, some people may have been able to actually save money during the lockdown but he warned that as the economy reopens, savers should not let their guard down: “For those who were lucky enough to grow their savings in lockdown whilst restaurants and shops were closed, now is the time to start looking at budgets again to see where you can continue to keep costs down and possibly make further cutbacks – especially as some establishments have now reopened.
“It’s good to understand what income you have compared to your outgoings, so you can prioritise what you do or don’t need.
“For example, what subscriptions or memberships do you have that you’re not using?
“Any extra cash you have leftover can then go into a savings account to put towards that all-important deposit.”
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On the flipside of cost cutting is actual saving and while many people may assume that to do it effectively large sums need to be put aside, Brian detailed that this does not necessarily have to be the case.
Save little and often
As Brian continued: “Saving doesn’t need to be daunting and it doesn’t mean you have to save huge chunks of money at a time.
“Even saving small amounts here and there will make a difference to long-term savings goals. It can be as simple as buying one less take-out coffee a week or going for a less expensive option at the supermarket.
“Some banks also provide the option of ‘round-ups’ meaning if, for example, you spend £2.83 on an item, the account will ‘round-up’ the transaction and put aside 17p in a separate pot.
“This way you can save little and often without even realising.”
His next tip focused on the current working realities that many people continue to face, despite the actual lockdown coming to a close.
Compare providers and switch
This is often viewed as a task that is more hassle than it’s worth but Brian attempted to make the process easier: “Although lockdown measures are starting to ease, many still continue to work from home, which means now might be the time to review any household bills you have, such as energy, phone provider or insurance.
“Comparing providers and finding better deals can help you save up to £200 a year, which will greatly benefit any contributions to a deposit.
“Why not try Look After My Bills or Bill Monitor, which helps you find the most suitable mobile phone contract based on your usage.”
Finding the best deals available can at times be difficult and as such, Brian’s next tip focuses on what options should be explored, especially for mortgage borrowers.
Talk to an expert
Despite the taboo associated with discussing finances, Brian highlighted that British savers may be more open than many realise: “It’s good to talk to people about your financial situation. We know that 59 percent of Brits are likely to openly speak with their partner about money, and over a third (34 percent) are happy to do so with a close family member.
“Speaking to a mortgage adviser is also a good option if you’re looking to get on the property ladder. They can offer you the relevant guidance on mortgage products available and how this in turn will affect your deposit savings.
“An adviser can explain all the options available to you and will look at your income and outgoings to establish how much you can afford to borrow and how much you’re able to save.”
Finally Brian went on to urge people to not be shy in taking advantage of the various government schemes on offer
Use government schemes
As he concluded: “The COVID-19 pandemic has seen the government introduce a stamp duty holiday, which may offer benefits for many first time buyers, but the government also offer several different Help to Buy schemes you could take advantage of to boost your deposit.
- “Help to Buy Equity Loan Scheme – If you’re a first time buyer and interested in a new build, the government will lend you up to 20 of the cost of your new build home. You will need to pay back the loan but not until after five years of being in the property – its interest free up until then too.
- “Lifetime ISA – If you’re a first time buyer, the Lifetime ISA acts as a savings account; with a few added benefits. You can pay up to £4,000 each year into your account and receive a 25 percent bonus (£1,000 maximum) from the government. The cash must remain in the account until you exchange on your first property – you will need to instruct your solicitor to withdraw the funds but this will all be explained when you’re ready to move in. All you need to do is save, save, save and you could be in for a lucrative bonus.
- “Shared Ownership Scheme – Shared Ownership allows first time buyers to buy a proportion of the property they can afford (e.g. 25 percent or 50 percent) and pay rent on the rest of it. It means that many people can access properties they would otherwise not be able to afford, due to the location or house size. This way, you’re also getting a foot onto the property ladder and then through a process called ‘staircasing’ can slowly save up to own more of the house until its yours outright.”
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