Once out of university, you will likely be carrying a lot of student debt. Try not to panic or focus on clearing it as soon as possible. However, remember that in 2020 you only start paying it back once you reach a certain level of earnings (e.g. £18,935 per year on 1998-2011 loans), and the debt is wiped after 30 years. As you start your career, therefore, it can make sense to turn your attention to saving for a house deposit.Of course, not everyone wants to buy a house and the necessary savings for a deposit vary across the country.
However, it is still very achievable and sensible for many people. Try to aim for at least 5% of the property price you are interested in. For a £100,000 flat, for instance, you’d need a minimum of £5,000. Bear in mind, however, that the higher your deposit the better the mortgage deal you are likely to secure.
Also, be careful not to neglect your pension or building an emergency fund during this time. Consider also investigating financial protection to help cover your new mortgage if you suddenly found yourself unable to work due to ill health or injury.
It’s worth considering whether the Lifetime ISA might be a useful financial planning tool as you start saving for a house deposit. Currently, you are allowed to save up to £4,000 per tax year into a Lifetime ISA and the government will contribute an extra 25%. The main condition is that you must either use the savings for a first home deposit, or after age 60 for retirement.