As regular readers of Moneywise will know, I bought my first house this summer – cue the popping of champagne and big smiles all round after five anxious months waiting for the sale to be signed on the dotted line.
Now, I know how fortunate I am to be in a position where I can do this, given many millennials sadly struggle to achieve homeownership as soon as they’d like.
Research published by insurer Zurich this summer found that a quarter (25%) of millennials’ current goal is to buy a house but that a lack of savings is the chief reason (56%) for putting them off.
For anyone in this position, I’d urge you to go back to basics: dig into your bank statements and work out what you can cut back on – I’m sorry to say it, but do you really need that Netflix subscription? Check out my Moneywise colleague Edmund Greaves’ blog for his budgeting tips – though he’s hanging on to his Netflix account.
Once that’s done and assuming you’ve no debts, hopefully you’ll have cut back enough to start funnelling some savings into a Help to Buy Isa or a Lifetime Isa. These government initiatives encourage first-time buyers to save for a deposit by rewarding them with a bonus based on the amount saved when they come to buy. Each scheme has its pros and cons, so read about them both on Moneywise.co.uk before deciding which to plump for.
Also, consider the little things you can do to earn a little extra cash – whether that’s filling in online surveys or selling your old clothes on eBay. We’ve put together 50 ways to boost your income.
For those who have taken their first step on to the property ladder, the biggest expense to contend with each month is mortgage payments. According to mortgage broker London and Country (L&C), millennials are making the highest monthly repayments of any age group, with average contributions of £908 a month as they deal with larger mortgage debt.
And while it’s slightly scary to think about exactly how big that mortgage is you’ve taken out to buy your home (gulp), the least you can do is ensure you’re not paying more than you need to.
If you have a mortgage with one of the big six lenders, you could be losing more than £3,000 a year by languishing on their pricey standard variable rates (SVRs), according to recent research by mortgage broker Trussle – that’s a mighty forfeit to pay for not shopping around when your fixed or discounted rate comes to an end.
However, I’m pleased to say some savvy millennials are already getting in on the act. Research from L&C found that 25% of millennials have remortgaged to get a better deal – higher than any other age group. In comparison, only 18% of those aged 55 or older have ever remortgaged. But while that’s a great start, that still means 75% of millennials aren’t remortgaging.
So check your paperwork or contact your lender to find out if you’re on its SVR already or when your fixed deal ends. Then contact a broker or use an online comparison tool (see www. moneywise.co.uk/compare) to find the best deal for you. Don’t forget to check for mortgage set-up fees – a more expensive interest rate with a lower fee could be cheaper over the term.