I saved for my £16k deposit with ‘last digit’ trick to buy £320k first home – it was so easy I didn’t even notice it
FINDING a savings method that suits you can make tucking away cash easier, as first-time buyer Lauren May found out.
The 31-year-old, who is a senior manager at Anthony Ward Thomas Removals, saved up the cash she needed for her £320,000 first home with a "last digit" savings trick.
Lauren put away £500 each month into a savings account in order to save up the £16,000 that she needed for her deposit.
But she topped up her savings using the nifty savings hack.
Also known as the "last number standing," the idea is simple.
The method involves checking your bank balance at the end of each day, and adding the last digit to your savings account.
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For example, if your balance is £1,234, you then add either 4p, or 40p – or £4 – to your savings fund.
Lauren said it's a straightforward way to build a savings habit and helped her to save up to £100 extra a month towards her deposit.
While this trick worked for Lauren, it might not work for everyone as it can require spare cash to put away.
But there are money-saving challenges suited to all budgets.
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Some ask you to put just pennies away, like the 1p savings challenge which could help you to squirrel away up to £670 a year.
Plus there's the 52-week challenge, which works by getting participants to put aside £1 for the first week, £2 for the second, £3 for third and so fourth, until the end of the year.
Different schemes will work best for different people depending on their circumstances - the idea is to make saving money more manageable.
While it might seem easier to stash small amounts in cash, you should think about whether a savings account would be better suited.
This is because you won't earn any interest on savings stored as cash.
Lauren also used a Help to Buy Isa and the Help to Buy equity loan scheme to get onto the property ladder quicker.
Both of these schemes have come to an end, but The Sun has put together a guide on other first-time buyer schemes that are still out there.
Lauren got the keys to her one-bedroom apartment in Isleworth, West London, in March 2020.
We sat down with Lauren to discuss how she went from being a saver to a homeowner for The Sun's My First Home series.
Tell me about your house
It's a one-bedroom flat in Isleworth, West London.
When you walk into the flat, there's a small hallway and a bathroom.
There's one double bedroom with a large window that looks over a small patio.
The living room and kitchen are open-plan with floor to window ceilings.
How did you decide on the location?
I was living at my mum's house which is just a 15-minute drive away from my new flat.
Having lived in Ealing all my life, I had never considered moving anywhere else.
But when it came to buying a house, it just wasn't feasible for me to buy in Ealing - it was just way out of my budget.
One-bedroom flats in Ealing started at around £500,000 and it still wasn't affordable even using the Help to Buy scheme.
Isleworth was within my budget and still pretty close to home, so it was perfect for me.
How much was it?
My apartment was £320,000.
I took out a mortgage of £176,000 over 35 years at a fixed rate of 1.9% for five years.
My repayments are £575 a month.
I could only afford to buy the flat because I applied for a Help to Buy equity loan.
It proved to be a lifeline and was the only way I could get on the property ladder.
It's a scheme that helps first-time buyers as you need just a 5% deposit.
The government will provide a loan of up to 40% of the value of the property if you live in London, otherwise you’ll get 20%.
There’s no interest added to repayments in the first five years.
You have to buy a new-build in order to be eligible for the loan, but that suited me perfectly.
I received a £128,000 loan and put down a 5% deposit of just under £16,000, with the mortgage covering the rest.
How did you save for it?
I had been saving for a deposit since the age of 25, but being young, I often dipped into my savings for things like holidays.
I was living at home with my mum and I was paying around £250 a month to her in rent.
But as soon as I hit my mid-twenties, she stopped charging me this so I could put all my efforts into saving for a deposit.
I know I was very lucky and that this isn't possible for everyone, but it was a huge help to my savings efforts.
Putting away a set amount
I tried a few different savings methods, like putting my entire salary into savings and taking out what I needed after.
My outgoings at the time were petrol, my phone bill, a gym membership, food shopping and the occasional holiday.
But this method wasn't very helpful as I found I was often taking too much out of my savings.
I then decided to put in a set amount of £500 into my savings. This was realistic for me and meant I wasn't constantly dipping in.
I did have to give up a few things, like the occasional night out and meals out, but the sacrifice meant I could stick to my target.
I bank with Barclays and they have a handy feature where you can hide an account when you view your mobile banking.
This was really helpful because it put the cash out of my mind - it was like I didn't have it.
At the end of the month, if I had any cash left over, I would add this to my savings. This could be anything from £50 to a few hundred.
Another method I found helped me was to add little bits of extra cash to my savings throughout the month.
The additional amount that I saved depended on the last digit in my account.
For example, if I had £578 when I checked my balance, I would add the £8 to my savings. I would do this a dozen times a month.
This could help me to save up to £100 extra a month. It was so easy and I didn't even realise the cash was leaving my account.
Holiday savings
I love going on holidays and I didn't want to have to give them up entirely while I was saving for my deposit.
Before I started saving, I wasn't very savvy about getting the best price.
I would often book last minute and, as a result, it was always pretty pricey.
To save cash, I would start booking my holidays between nine and twelve months in advance.
This would help me to save up to £400 on accommodation and flights.
Help to Buy Isa
I also had a Help to Buy Isa which I put £200 into every month.
By the time I was ready to buy, I had saved up around £6,000 in that account.
The bonus from the Help to Buy Isa was around £2,000.
How did you afford to furnish it?
I saved £25,000 in total to account for my deposit, fees and furniture.
Because I was moving into a new-build property, I wanted all my furniture to be brand new too.
My savings habits had put me in good stead and I reached my target by my move-in date.
I ordered new furniture to the storage and kept it in storage until I completed on the property, so that I had it ready in time.
Some furniture companies had a six to eight-week delivery so it was better for me to store it rather than wait until I completed.
By doing this, I was also able to check for any manufacturing defects on new items, which a couple of the pieces had so I kept them in storage until the supplier exchanged them.
Do you have any advice for other first-time buyers?
Just start saving as soon as you can because having your own home is so worth it.
You will have to sacrifice things and you might feel like you're missing out, but you just have to focus on the long-term goal.
My home is my happy place and I feel so calm when I'm there. I wish I had started saving sooner.
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