Like many millennials the idea of owning my own property often seems like a pipe dream – what with ridiculously high house prices and low salaries. With rent often costing two thirds of your salary it can seem impossible to find the funds needed to save for a deposit for a mortgage. Read on to see 6 alternative methods you can use to make the most of your savings to put towards saving for a deposit.
Peer to peer lending
Peer to peer lending works in a similar concept to traditional loans but instead of banks and financial institutions lending money to people – you do. Essentially you become the lender and work through sites like Zopa offering your savings to lend out in exchange for a generous interest rate (often up to 5%). Peer to peer lending is not a short term solution but when you consider how long it can take to save up a 5% deposit this can often take a number of years. Obviously there is risk involved and they’re not regulated by the Financial Services Compensation Scheme but the sites do monitor the borrowers and chase them so they make the repayments. I have used Zopa since 2014 and I have not lost any money.
You don’t need thousands of pounds to make investments. Apps like Moneybox or sites like AJ Bell allow you to start investing from as little as £1 a week. They’re really simple to use and do all the investing for you so if you don’t really understand the complexity of the stock market you don’t need to.
It really doesn’t pay to be loyal to your bank anymore when you’ve got lenders throwing money left right and centre to get you to join them. Some offers are very lucrative and require little more than a full bank switch with £750+ paid in monthly and two direct debits. You can set up a spare account and keep shifting that around the banks ensuring that you follow the few requirements they ask for to get your bribe. Once they’ve paid you the money you can switch to the next lender and benefit from the next reward. Current offers include £75 from Halifax and £125 gift card from M&S. Other offers get released all the time so keep an eye out.
High interest savings accounts
Whilst the banks have been rocked by brexit recently they do still offer pretty decent interest rates on their current accounts. Interest is typically paid on a monthly basis and can add up to a extra £36-£122.25 a month. Individual rules apply to each lender but these normally require a fixed payment in each month and 2 direct debits set up. Current offers include:
Nationwide Flexdirect pay 5% fixed on £2,500 for a year
Tesco pays 3% on balances up to £3,000
Santander pays 1.5% on balances up to £20,000
Bank of Scotland pays 2% interest on £5,000
Tsb Classic Plus pays 3% on balances up to £1,500
Club Lloyds pays 2% on balances up to £5,000
Help to Buy ISA
Did you know the government want to help young people get started on the property ladder? The Help to Buy isa is great for those looking to buy a home as the government will add an extra 25% to whatever money you have available when you go to get your mortgage. You can add £1,200 in the first month and then a extra £200 each month after. Bonuses will be applied once you’ve saved at least £1,600 and can go up to a hefty £3,000 bonus on savings of £12,000.
Cashback is one of my favourite ways of earning extra money on services and products you’d buying anyway. Whether it’s your car insurance or your food shopping don’t let the chance to earn money for spending money slip through your fingers. TopCashback is a great place to start.