Top 3 Places to Stash Your Savings as a First Time Buyer

As the calendar turns over to a fresh tax year, the excitement of new beginnings fills the air, particularly for a First Time Buyer (FTB) like you who's diving into the journey to one day own your own home. This is the moment right here! At a time of new beginnings. It's your chance to take charge, to plan strategically, and to set yourself up for success in the home buying process. The more effort you can put in, not only in preparing your finances for that important mortgage application, but also through knowledge to make sure you're equipped with the confidence and foresight needed to navigate this adventure.

Let's get down to business. At the heart of your mission lies the crucial task of saving up enough funds to make that dream of home ownership a reality. We're talking about everything from your all-important deposit to the inevitable home buying costs like legal fees and surveys. It's a financial flummox that requires careful planning and attention to detail.

But where would you stash these savings? This is where some of the important knowledge comes in to play for working out where best to contain your hard-earned coin, with the benefits of the best returns.

Here are the 3 most powerful places for your savings as you embark on your journey to home ownership.

The Lifetime ISA (LISA): By far, the most commonly used vehicle is the LISA. This could be your secret weapon in building up your deposit reserves. If you meet the eligibility criteria and have your eye on a property below the £450k mark, the LISA offers a fantastic opportunity to kick-start your savings journey. It offers the best returns, a guaranteed 25% top-up by the government above what you lob in. But like with everything, there are a few conditions attached to the LISA so it isn’t the best tool for everyone, but for most FTBs it is well worth the consideration. It's important to understand the ins and outs of how it works to truly make the most of it, so make sure you do your research on the rules around putting your deposit money in to a LISA as well as the rules for getting your money back out.

Ordinary ISAs: A LISA is well and good but for home buying, you can only use the funds in the account towards your deposit. Buying a home comes with other transaction costs too, like legal fees and surveys (there are others too which we have covered in previous posts – so have a look at those for more detail). So you will need somewhere else to save up the other home buying transaction costs. Also, your unique circumstances may mean that a LISA isn’t right for you. An ordinary ISAs as another repository in your arsenal where you can stash your savings. With tax-free savings potential, they can help you beef up your deposit reserves without losing any of it to taxes. It's all about choosing the right funds and investment strategies that align with your goals for the future to make sure that you have all of your deposit money when its time to use it.

High-Interest Savings Accounts: And let's not forget about high-interest savings accounts too. They come in all shapes and sizes and are offered by high street banks and other financial institutions, offering different options to suit your preferences and timelines. Just make sure you choose one which is part of the Financial Services Compensation Scheme (FSCS) which protects your savings up to £85k per person per financial institution. Whether you're into locking your money away for a fixed period or prefer the flexibility of instant access, there's something out there for everyone. You just need to make sure that if you lock your savings in that they are available at the time you need access to them so that you don’t pay early withdrawal fees and lose out on any of the benefits.

As we stand on the cusp of this new tax year, we’re here to empower you with the knowledge and tools you need to make informed decisions about your financial future. Let's work together to unlock the potential of LISAs and ISAs, turning your dream of home ownership into a concrete plan.

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