1. Grow your money faster on the stock market
Someone saving £200 a month for 10 years with a 1pc interest rate could amass a sum of £25,229. However, if the money was invested in the stock market and a 5pc return was achieved, a sum of £31,056 would be amassed. If they achieved a 10pc annual return, their final sum would be £40,969, however be aware that to achieve higher investment returns, far greater risks are taken with your money. The value on any stock market investment can go up and down over time, meaning you really need to be investing for at least five years.
2. Move back home with parents
This is not an ideal solution as most 20-somethings crave adult independence. The last thing they want is their parents snooping around their bedrooms or making them do the washing up. However, living at home for several years could be the difference between you buying your own home and renting long-term. Homelet figures show the average 25-year-old renting in the UK today will have spent £28,668 on rent over the course of their 20s. That's enough for a deposit on a first home in some areas of the UK.
3. Don’t lose your rental deposits
If your landlords tries to keep all or some of your rental deposit, that could really set you back financially. Before you move in make sure you do an inventory and take photos which can be used as evidence later, if your landlord tries to deduct money from your deposit. Also check your contract to see if it says the carpets need to be deep cleaned, make sure you do it, and patch up any damage such as holes in the walls. Ensure nothing from the inventory is missing or broken. If your landlord unfairly tries to withhold your deposit, you can get it back through the arbitration process provided by the deposit scheme in which your money is held.
4. Get a good credit rating
Credit scoring is a system used by lenders to check how financially attractive you are to them, using your past actions to predict how you will manage your money in the future. If you don’t have a good credit score you’ll struggle to get a mortgage. If you’ve been flat sharing and you’ve had a joint account with flatmates then watch out: if the person you’ve shared with has a worse rating than you, they could drag yours down. Improve your rating by getting on the electoral roll, always paying your bills and using a credit card without missing payments.
5. Become a property guardian
If you don’t mind living in a church, a disused school, or an office, the average tenant could more than half their rent by becoming a property guardian. Basically, you’re getting paid to babysit an empty building to fend off squatters and tramps. The monthly rent is typically £200 - £300 a month. This would mean someone paying £600 to live in a flat share could save £300-£400 a month extra towards buying a home. So, a two-year stint as a property guardian could save you £9,600.
6. Buy with a friend or do shared ownership
Shared ownership schemes allow you to part-buy and part rent your home. You buy a share of your chosen property (typically between 25pc and 75pc) which you’ll pay for gradually with a mortgage. You then pay rent to a housing association on bit that you don’t own. Another option is to buy a whole property, but do it with a friend. If you do this it’s well worth paying to get proper legal agreements drawn up in case one of you wants to sell your share.
7. Build your own home
It sounds like something you’d watch wacky people doing on TV, but a growing number of first time buyers in the UK are building their own homes. In March the Chancellor announced a new “right to build” scheme, which gives custom builders the right to buy plots of land from councils on which they can build their own houses. According to the National Self Build Association, it's possible to build a three-bed home for around £150,000, and you can save on stamp duty as you pay it on the land value, rather than the building materials.
8. Consider buying a house boat
If you’re single or there’s only two of you, a house boat could be a far cheaper option than a one or two bedroom flat. If you’re willing to put up with having no electricity after dark, limited space and having to empty your own toilet, you could pick one up for less than £50,000 – which you can pay for over the course of several years with a "marine mortgage".
9. Look outside your ideal area
If you're set on bricks and mortar, location is key to affordability and most first-time buyers tend to buy in “emerging areas”. The difference in price depending on where you buy can be staggering – for example in London, the average house price in the cheapest Borough, Barking and Dagenham is £251,000, whereas in the most expensive, Kensington and Chelsea, it is over £2m.
10. Be prepared to suffer
Unless you're a Mark Zuckerberg or Lena Dunham-style earner, or you have wealthy parents, saving enough to buy a nice place to live isn't going to come easy. If you're serious about getting on the property ladder you'll probably need to live frugally for a few years, possibly a decade if you're a modest earner. Accepting short term pain for long term gain is tough (who wants to spend their twenties sitting at home sipping tap water?). However, it could be the best financial decision you've ever made.