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Could you buy your first home with reward points?

New loyalty scheme helps shoppers save for a house deposit

Aspiring homebuyers are often being told to cut back on luxuries to save for their first deposit – but a new points scheme aims to help you build up a deposit while you spend.

Like a clubcard, Brix points can be collected on everyday purchases, then converted into cash when you want to pay a deposit for a property.

Which? looks into how the scheme works, and how it compares with other schemes for first-time buyers.

  • If you’re looking to buy your first home, and would like advice on your mortgage options, call Which? Mortgage Advisers on 0800 2942 849.

How does the loyalty scheme work?

To be part of the scheme, you have to sign up to Brix using your name and email address. Doing this gets you £50-worth of Brix points, where £1 equates to one Brix point.

You can earn an additional 10 points for each friend you successfully refer to the scheme.

There are currently 220 participating brands that you can collect points with from today, including Tesco, John Lewis, Paperchase, Booking.com, Papa Johns and ToughMudder.

Points can be collected from purchases made online or in-store.The number of points you earn from each retailer depends on the commission Brix receives from them. You can also earn points from regular payments for utilities, mobile phones and insurance.

Theoretically, spending money on a holiday – a luxury many people feel they ought to cut back on when saving for a deposit – could actually help save for it. But remember you won’t necessarily earn the equivalent value in points, so spending £1,000 on flights won’t equate to £1,000 worth of Brix.

Your spending is tracked online using affiliate marketing company Awin, and in-store by submitting a unique voucher code at the till.

How can you use your points?

Transactions can be seen on the Brix website, with the number of points received next to the purchase and the brand logo. You can also connect friends and relatives to your Brix account, so that their shopping can be added to your points fund, at no cost to them.

As you earn points, the equivalent amount of money is added to a ring-fenced client money account, which is held with a solicitor’s firm.

This money can then be spent directly from the solicitors in three ways:

  • directly to a conveyancer for those purchasing their first owner-occupied home
  • directly to a letting agent or landlord as a rental deposit
  • as a payment into a lifetime Isa – currently, Brix has partnered with provider Nutmeg, which will give 25 extra Brix points to those who sign up.

Should you collect Brix points?

As there is no account fee, you don’t necessarily stand to lose anything by collecting Brix points.

But with home deposits often in the tens of thousands, you’re unlikely to save a deposit through points alone. Any plans to buy property should start with a clear savings plan.

You also won’t be better off if you spend on items or services you wouldn’t otherwise use. While earning points for your weekly grocery shop makes sense, excessive shopping just for the sake of collecting points will leave you further from your savings goal.

Also, keep in mind that points can’t be used for any other purpose. So, for example, you can’t exchange points for the equivalent value in cash. Unless you have clear plans to buy a property, you may not see the benefits of gathering points.

What other help is out there for first-time buyers?

There are a number of government-backed initiatives that give free bonuses to those who are saving for their first deposit.

Help-to-buy

The Help-to-buy scheme is made up of Help-to-buy equity loans, London Help-to-buy and Help-to-buy Isas.

The equity loan is for first-time buyers who can put down a deposit of at least 5% on a new-build property, and the government then lends you up to 20% of the property’s value as an equity loan.

You then take out a mortgage on the remaining amount.

Those who save into a Help-to-buy Isa will receive a 25% government bonus – up to £3,000 – on their savings.

The account is tax-free, but you are capped at how much you can pay in. When you open the account you can pay in a maximum of £1,200, but you can only pay in £200 each month after that.

You must have saved at least £1,600 before the money can be put towards your first home, and the property can only cost up to £450,000 if it’s in London, or £250,000 in the rest of the UK.

Lifetime Isa

There’s also the lifetime Isa. These savings are also tax-free, and can be used either for your first home, or to use in retirement when you’re reach 60 or over.

The government also contributes 25% of your savings, but with a lifetime Isa you can pay in up to £4,000 each year, and therefore receive a maximum of £1,000 a year in government bonuses.

The money can be used on a property costing up to £450,000 anywhere in the UK.

The bonuses are paid into your account on a monthly basis, so you also have the advantage of earning interest or investing the extra money, depending on whether you have a cash or stocks & shares lifetime Isa.

Budgeting apps

For additional help saving while you spend, apps such as MoneyBox are designed to help you save without even realising it.

By rounding up money you spend to the nearest pound – bringing your £3.50 sandwich up to £4, for instance – the extra change can be invested, with the aim of growing a savings pot.

You can choose from three investment options, depending on your attitude to risk, and you can choose to top-up your investment whenever you like.

However, it’s worth bearing in mind that as investments always carry a risk, you’re not guaranteed to make a return.

The service also charges £1 a month for subscription to the app (this is free for the first three months), a 0.45% annual platform fee and 0.23% monthly fund provider fees.

And when you’re ready to buy your first home, Which? Mortgage Advisers can help you find the right mortgage for you. Simply fill out the form below for a free call back.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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