The value of investments and any income from them can fall and you may get back less than you invested.

Case Study: Buying your first home

Case Study: Buying your first home

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This case study shows how saving into an ISA can help you to save money for a deposit.

Heather, 33, earns £70,000 as a sales director. Despite earning a high salary for her age, she has yet to get a foot on the housing ladder.

Until she reached her late twenties buying a property wasn’t high on Heather’s agenda. She spent the early part of that decade building up her career and enjoying life.

But when Heather was 28 she decided she wanted to have a place of her own. The only thing holding her back was a lack of deposit – or indeed any significant savings.

The plan

  • When she was 28, Heather’s parents offered her £10,000 to invest towards a deposit.
  • Heather then methodically invested another £500 each month (£6,000 a year) in a Stocks & Shares ISA, with much of her fund invested in equities.
  • The stock market can be a risky place in the short term, but it also offers the potential of higher returns than a cash savings account over the long term.
  • Heather decided that was a risk she was prepared to take.
  • Assuming average growth for a stocks and shares ISA of 4% per year net of charges – and that the £10,000 from her parents is invested at the outset – five years down the line Heather now has £45,300[1] in her account.
  • A flat in Heather’s local area costs around £450,000.
  • She uses £45,000 of the money saved in the ISA to put down a deposit of 10% to secure a mortgage.
  • Heather’s offer has been accepted, a survey completed, her mortgage application approved and she is now looking forward to completion and moving into her own home.

 

 

[1] Source: Brewin Dolphin.


 

The value of investments can fall and you may get back less than you invested.

Past performance is not a guide to future performance.

No investment is suitable in all cases and if you have any doubts as to an investment's suitability then you should contact us.

Please note that this document was prepared as a general guide only and does not constitute tax or legal advice. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change.  Tax treatment depends on your individual circumstances; therefore you should not rely on this information without seeking professional advice from a qualified tax adviser.

Brewin Dolphin does not provide mortgage advice.

Brewin Dolphin Limited is authorised and regulated by the Financial Conduct Authority.

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