‘How can I save for a mortgage?’

Sales assistant Sian James, 27, lives alone in Wrexham, north Wales

“I work at a mobile phone store, so my pay varies as it’s partly commissionbased. Last year, I earned £23k before tax. I’m careful with money and use money-saving app Squirrel to save around £20 each month. But I’d like to clear my £1,480 credit card balance by February, when it’s no longer interest-free.

“I’ve opened a Help To Buy ISA and I’ve got £900 in there, but I don’t know how much I’ll need for a deposit to get a good rate on a mortgage. Plus I’m not sure how long I’ve got to use the Help To Buy scheme. I’ve also had offers to increase the limit on my credit cards, but I don’t know if that’s good or bad when applying for a mortgage.

“I’ve joined a pension scheme with my company, too, but I’m concerned about what would happen if they go bust – is it better to have a savings account? I’ve also considered health insurance – I worry that if I fall ill, I won’t be able to cover my living costs. I want to be prepared.”

SARAH’S 3-POINT PLAN 1) SAVE FOR A MORTGAGE With a Help to Buy ISA, you must claim your bonus by 1 December 2030, giving Sian plenty of time. She should aim to save at least 5% of the property price – but the more she saves, the better her mortgage rate will be. The fact she’s being offered better credit suggests her credit rating is good, which bodes well for a mortgage – but if she doesn’t need the limit increased, she shouldn’t bother. 2) MAKE INVESTMENTS Rather than health insurance, I think Sian means critical illness cover, which pays a lump sum if you’re diagnosed with a lifethreatening illness. It’s worth considering once she has a mortgage, but the cheapest policies have the fewest conditions covered. With a workplace pension, the government or your employer contribute too, so it’s better value than a savings account. As long as the pension provider is authorised by the FSA, her savings will be protected. 3) CUT COSTS To save more, Sian should only need a personal trainer or a gym membership – not both. She should also look at whether her “packaged” bank account, where she pays £10 per month to get travel and phone insurance, is worth it. Standalone policies are often cheaper.