Cash Clinic helps wannabe first-time buyer save £1,600 a year on £13,000 annual salary
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COUNSELLOR Natalie Mills, 28, is desperate to move out of her shared rental digs and get onto the property ladder, but she earns just £13,000 a year.
And the average first-time buyer property in Manchester, where Natalie lives, is £176,512 with an average £23,306 deposit, according to property portal Zoopla.
So Natalie has turned to our Cash Clinic expert, Holly Thomas, to see if there are any ways she can cut her spending.
Natalie told The Sun: “Paying both rent and bills makes it really hard to save on my salary.
"Last year I earned around £800 to £1,000 a month but this can vary as my job is freelance.
"I hope to earn £13,000 this year and I'm hoping to take on extra work too, to help with saving.
It's really hard to save on such a low income
Natalie Mills
“But it’s really difficult on such a low income to save for a deposit in the first place.”
At the moment, Natalie stashes £200 a month into a Help to Buy Isa with NatWest. The interest rate is 2.5 per cent, and she’s saved £6,800.
She also uses a tool called Plum, which calculates how much she can afford to save each month and moves small amounts of money from her bank account automatically into a separate savings account.
"I saved about £150 using Plum, and didn’t even notice it going out of my account – but I’ve used this to pay for Christmas presents," she added.
But while the 28-year-old is fairly savvy, using cashback sites to bag a bargain, Cash Clinic has still managed to slash Natalie's annual costs by more than £1,600 a year.
She can use this to boost her deposit, which she's building alongside her boyfriend as they're hoping to buy together next year.
Here, we reveal how Natalie can save...
Why we're launching Cash Clinic
THE Sun has launched its new Cash Clinic series because we want to help you, our readers, to save cash.
For some, it's easy to get caught up with work and family life and to put our own finances on the back burner.
While for others, it needs an expert's eye to work out where further cutbacks can be made to already tight budgets.
If you'd like our Cash Clinic expert to review your finances and to feature in our series, please email Holly Thomas at [email protected]
Petrol: £50 per month
New spend: £33.40 per month
Saving: £16.60 per month
Natalie currently spends around £50 a month on petrol to get her to and from jobs and estimates she drives around 10,000 miles a year.
She says she can't use public transport to easily get between places, and because she often finds out about work at the last minute.
So a public transport season ticket wouldn't work.
Use PetrolPrices to shop around for the cheapest fuel
But if Natalie shops around for the cheapest fuel in her area she could save herself cash.
Petrol comparison site, says it saves the average user driving 10,000 miles a year £200 - or £16.60 a month.
Sign up for free and it will tell you where in your area the cheapest prices are each time you fill up.
If a supermarket comes out on top, also check to see if it's offering money off coupons - Sainsbury's and Tesco often give 10p a litre off fuel when you shop with them.
Groceries: £100 per month
New spend: £70 per month
Saving: £30 per month
Natalie does little shops every few days at Aldi and Lidl because her fridge is small. She tends to buy own brand as well as a few household name items.
We took a look at her weekly outgoings on groceries and found she could save £30 a week by using .
This tool compares prices to show you where you can get every item on your shopping list for the cheapest price.
Credit card: £50 per month
New spend: £23 per month
Saving: £27 per month
At present Natalie owes £1,000 on an interest-free Post Office credit card and repays about £50 a month, which is double the required £25 minimum repayment.
But the offer is going to expire soon and Natalie will be charged 19.9 per cent interest
If she switches the balance to a new 0 per cent interest-free credit card - at the time of writing there were 29 month deals available - the minimum repayment would fall to about £23 a month and Natalie wouldn't pay any interest.
Do you want help in our Cash Clinic? Email [email protected]
This would see her cut outgoings by £27 a month but it would mean it takes longer to repay the debt.
Natalie would need to compare and find the best card and remember that only 52 per cent of successful applicants get the advertised rate.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy Isa - It's a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan - The Government will lend you up to 20 per cent of the home's value - or 40 per cent in London - after you've put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa - This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.
Shared ownership - Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you're restricted to specific ones.
"First dibs" in London - London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative - A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest on the website.
Social life: £40 per month
New spend: £5 per month
Saving: £35 per month
At the moment Natalie spends £5 a class going rock climbing twice a week.
But if she switched this up to go once a month and then used free classes, such as Coca Cola’s initiative, she'd cut her £40 monthly costs by £35.
Eating out: £50 per month
New spend: £25 per month
Saving: £25 per month
Natalie is pretty savvy when it comes to eating out, using - which you get by taking out an insurance policy from CompareTheMarket - to make the most of two for one offers.
But she still ends up spending around £50 a month on takeaways.
She could try making her own "fakeaways", which are half the price, instead and often end up being healthier too.
Natalie could halve the cost of takeaways by making her own 'fakeaways'
Alternatively, she should look for takeaway offers on voucher websites such as MyVoucherCodes and HotUKDeals.
Domino's, for example, currently has 25 per cent off when you spend £30 online, while Papa John's has £15 off first orders over £30.
Rent: £272 a month
New spend: £272
Saving: £0 a month
It will be difficult for Natalie to cut back on her £270 a month rent bill - unless she manages to find an even cheaper property to rent in or can move back in with family.
But when it comes to renewal she could try and haggle prices down, or at the very least argue against any proposed increases.
What has Cash Clinic saved Natalie?
Cash Clinic has managed to squeeze an extra £133.60 a month (£1,603.20 a year) from Natalie's outgoings.
This means she can now put at least £333.60 towards her house deposit, plus any disposable income left over each month.
The Help to Buy Isa is closing to new applicants from December 1 although existing users such as Natalie will continue to be able to save into one.
But personal finance expert Andrew Hagger of comparison site Moneycomms.co.uk suggests switching to a Lifetime Isa (Lisa) instead of a Help to Buy Isa because you can only save £200 a month in a Help to Buy Isa.
The Lisa bonus is also capped at a much higher £32,000 in total compared to £3,000 with the Help to Buy Isa.
Mr Hagger said: "Natalie will get the same 25 per cent government bonus in a Lifetime Isa, but can save a maximum of £4,000 a year, compared to £2,400 [plus an extra £1,000 in the first month] with a Help to Buy Isa."
It means Natalie will earn £1,000 a year from the Lisa bonus if she saves the maximum of £4,000 a year (£333 a month), that compares to £600 a year with the Help to Buy Isa [excluding any boost from a £1,000 first month top-up].
It could be worth switching to a Lifetime Isa instead of a Help to Buy Isa
My Hagger says any remaining disposable income can be stashed in a Cash or Stocks and Shares Isa, as long as the total amount in Isas doesn't exceed £20,000 a year for 2019/20.
An easy access savings account, meanwhile, means she can withdraw the cash when she's ready to buy her property without being hit by early exit fees.
Or if she locks cash away into a "fixed" savings account then she'll get a better interest rate, so it depends on how long Natalie wants to save for.
To find the best account use a comparison website such as or to find the best account.
If Natalie saves at least £333.60 every month she'll achieve the extra £16,306 needed for the average first-time buyer deposit in Manchester in just over four years.
But this will drop to around two years if she's splitting the deposit equally with her boyfriend, and she'll be able to get there even quicker if she tops it up with any disposable income or if she gets a pay rise.
How we saved Natalie £1,603.20 a year
HERE'S how we've saved Natalie cash:
- Petrol: £16.60 a month or £199.20 a year
- Groceries: £30 a month or £360 a year
- Credit card: £27 a month or £324 a year
- Social life: £35 a month or £420 a year
- Eating out: £25 a month or £300 a year
TOTAL SAVINGS: £6,623.92
Plus, that's before you add any interest earned from her Isa and the government's 25 per cent bonus on top too.
Once the couple have saved for a deposit they will need to work out how much they can borrow - and as a freelancer Natalie will have to produce at least three years' of bank statements.
Another option for Natalie would be looking at buying a house through shared ownership.
This involves buying a portion of a property, while paying rent to the housing association on the remainder.
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David Hollingworth, from mortgage broker London & County, added: "Natalie can also look at the Help to Buy equity loan scheme.
"It offers a loan on new build properties of up to 20 per cent of the purchase price, with the buyer putting down at least 5 per cent.
"These equity loans are initially interest-free but must ultimately be paid off - usually on sale of the property.”
Since The Sun talked to Natalie, she has now got a new job and with her higher salary she's been able to repay her credit card before the interest-free period expired and is now hoping to get onto the property ladder with her boyfriend in April 2020.
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