Interest rates across all types of products are hitting all time lows. It is a problem covered by many financial experts including Martin Lewis, who regularly advises people to switch accounts. As he details, a general rule of thumb is to never accept an account that offers rates lower than the highest one available which, according to his research, is currently 1.3 percent.
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The low interest rate environment is especially problematic for millennials aiming to get on the property ladder.
Millennials are people who are generally aged between early 20s and late 30s and they generally have less financial security than previous generations.
They have been negatively affected by a combination of stagnating wages and skyrocketing house prices, meaning that getting a deposit alone is difficult let alone the mortgage itself.
It can seem hopeless at times but success stories are out there from people who take heed of basic financial tips like switching bank accounts.
The property buyer Good Move crowd-sourced some of the tips from young people that helped them buy their first home, all while living on their own.
Charlotte Taylor, 28, from Leeds took advantage of certain bank incentives: “Most banks offer cash incentives for switching your account to theirs.
“Shop around and work out which bank is best for you. You’ll get all the benefits of the new account, as well as the new member cash reward.”
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Many of her tips also had nothing to do with financial matters, which is beneficial for those who have limited resources.
As she suggested: “Cancel your gym subscription and join a Park Run instead. There are also loads of YouTube workouts, as well as great free apps that can track your progress.”
Her tips follow a every modern 21st century theme: “Take a digital detox. Deleting Instagram and other social media will stop a lot of temptation and FOMO (fear of missing out) spending – and it will probably make you happier too!”
Many people will likely want to utilise these tips as it is proving harder to get on the property ladder without seeking assistance from family members.
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Recent research from Money Super Market reveals that loans from family members doubled over the last 12 months.
The specific amount given by family members has risen to nearly £6,000, equating to £281 billion across the nation.
According to their findings, 20 percent of people who borrowed money from family members used it to help pay for a deposit on a house.
The house price issue is really illustrated by the fact that 13 percent of people borrowed between £10,000 and £50,000 which will be a hefty chunk of most families’ personal finances.
Unsurprisingly, the biggest receivers of these loans fall into the millennial age bracket.
As MoneySuperMarket detail, those aged between 25-34 are the most likely to have taken a loan from a family member, making up to 70 percent of the total sample.
The government appears to be aware of the issue and has launched various schemes over the years to try and help struggling home buyers. They currently provide financial help for eligible applicants in the form of low-interest loans as well as shared ownership contracts.
On top of this, the government has also launched help to buy and lifetime ISAs in recent years with provide tax free bonuses for house purchases.
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