You’re in your 20s and 30s. Holding down a job, but struggling with a toxic combo of ever-higher rents, rising costs of living and possibly student debt too. You don’t want to live at home forever but current house prices are brutal.
We can’t wave a magic wand but we can share some quick ways to get ahead and max out what you’re entitled to. The Government offers some free top-up cash for first-time buyers courtesy of the Help to Buy and Lifetime ISAs. Loved-up with another first-time buyer? Double cash.
There are 2 sorts of savings account designed to help first-time buyers with Government top-ups.
A Help to Buy ISA will offer first timers up to £3,000 free from the Government – a Lifetime ISA (LISA) could net you a higher bonus of up to £12,000. But there are strings attached to the LISA in the form of exit fees and no wriggle room if you change your mind.
There's also an age restriction on the LISA. Over 40? Sorry to deflate you further but you're too old.
Finally the Help to Buy option is cash only. Lifetime ISAs offer you a stock market option which can pimp your returns over the longer-term but carries more risk too.
Your credit score is going to matter if you do want to buy a place. It’s a catch 22 situation. You need a good credit file to get a mortgage approved. To get that, you need to demonstrate you’re a reliable borrower who can pay back debt on time. To do that, you need to have a history of borrowing and in order to get approval for credit…yes, you’ve guessed it…you need to have a good credit file!
So I bet you’re thinking; how the hell am I supposed to get around this? Well, you’ve gotta play the credit game. Click on, gentle reader.
Pensions probably feel a million miles away but if you have an employer they need to be paying into one for you – make sure you know what you’re due. The law has changed and every employer now has to offer their staff a pension. From 2019 you will have to put in at least 4% of your salary (or ‘qualifying earnings’ which is the total between about £6,032 and £46,350). The Government will bung in an extra 1% and your employer has to put in at least 3%. So that’s 8% which will be building up, month after month. The more you earn, the more you will save. You can refuse to take part (“opt out”), but it’s not a great idea because you’ll forfeit the 3% from your employer and 1% from the government.
It's unlikely that your employer will offer a final salary scheme, but be really careful before moving it or fiddling. Some of these guarantees are like hen’s teeth these days and you will be worse off if you move it.
Ready to get started? At the end of the learning path, we’ll suggest some links, products and guides.
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Holly and Georgie discuss long term savings goals and how best to stash your cash for maximum benefit when you're saving hard for something big like a house or school fees or even retirement.
Holly and Georgie discuss the pros and cons of Help-to-buy versus Lifetime ISA products, explain the differences and figure out which one is best for different types of savings goals.
Deep down, you have a feeling that you’re being a bit screwed over by your landlord. And we all love our parents – well, most of us do anyway – but living under the same roof as them would make even Mother Theresa go on the rampage from time to time. How about your very own parachute plan to get you out of expensive rented accommodation or the B’n’B of Mum and Dad?
Free Government Money!
25% freebie government bonus for first time buyers
Lifetime ISAs let you save into the stock market as well as cash
Top Help to Buy ISA pays 3% interest today
Lifetime ISA carries hefty exit fees - not for ditherers or the unsure
Here’s a table showing the differences between the two first home buyer schemes.
The Lifetime ISA combines all the lovely benefits of an ISA with some of the attractive features of a pension – a chunky 25% bonus from the government
A credit score is a magic number that is used by lenders to assess how reliable you are as a borrower.
The idea is that it indicates your likelihood of paying back debt on time, which lenders want you to do. It works on the basis (rightly or wrongly) that what has happened in your past is likely to happen in the future – so if you have shown a proven track record of responsible borrowing, lenders will feel you’re a safe pair of hands and are more likely to approve you for credit.
Each lender will put together its own credit score for you behind closed doors. Each lender will score you differently based broadly on three criteria: past dealings with you (if any), application information AND your credit file.
Nothing is private these days, not even your cash. Even if you’re starting from a low base, make sure your credit score looks as fit as it can. We show you three rules to having a well-fit credit score; they’re easier than you think.
This might all seem very secretive and furtive, but the good news is that you CAN see your credit file by registering with a credit reference service like Experian, Equifax and Noddle. Noddle’s is free. With Experian and Equifax you can sign up to a 30-day free trial.
1. If you haven’t already, get on the electoral register with your current address – it takes about 20 minutes and you can do it online.
2. Pay bills on time or ahead of schedule, even if it’s just your broadband or mobile contracts, and it will help to bump up your credit score over time.
3. The trick is to get on the radar; lenders need to know you can pay back debt on time. You’ve got to convince a lender to let you take on manageable debt that you can easily handle and will show that you can pay back debt on time. The two most common (and sensible) ways to do this are through a credit card or an unsecured loan.
More tips and advice in our Credit Scoring Guide
However many jobs you've had, if you work and are over 22, chances are you’re invested in the stock market through your now compulsory pension at work. From April 2018 we all began paying in 3% of our salary (on our earnings between around £6,000 and £45,000) and the boss has to pay in 2%. From April 2019, we pay in 5% and the boss pays in 3%. So that’s about 8% in total, year in year out. It will make an enormous difference to your life in the long run.
Contact your boss or HR department to know more. You can opt out but this is generally a really bad idea as you kiss goodbye some freebie top-ups from your boss and the Government. Again: free money from your employer and the Government. Make sure you get what you’re entitled to.
Holly discusses the importance of having a pension and how to get free money from the government.
Holly and George talk different kinds of pensions and why so few people take advantage of their pensions allowances.
There are lots of providers who offer these products – so many it can feel overwhelming. We’ve broken it down into digestible chunks.
Look through our updated guide to Lifetime ISAs
Not sure whether to rent or buy? Have a look at these:
When you’re ready to look at product options, check out our Best Buy tables. For customer ratings and reviews.
Even the stuffy world of finance is going digital and there are some nice new apps which make saving a lot easier. Some apps just round up your change from card purchases and invest it for you with minimum faff and fuss. Low-touch investing from a small base. That’s smart.
Even the stuffy world of finance is going digital and there are some nice new apps which make saving a lot easier. Some apps just round up your change from card purchases and invest it for you with minimum faff and fuss. Low-touch investing from a small base. That’s smart. Check your credit score with a credit reference service like:
Robo advisers are the new digital way to save for people who want easy access without the economics lectures. With starting amounts from just £1, offering easy questionnaires, ready-made portfolios and mobile access, this is a fuss-free way to invest which looks very different to the stuffy, pricey, bowler-hatted City service.
Have a look through our simple guide to robo advisers