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How To Save Money For A House
Buying a property is, for many of us, the single biggest purchase we’ll make in our lifetime. It’s an investment in the future, not just financially, but socially and emotionally as well. While most people dream of homeownership, many are put off by the prohibitive costs involved - although most of these you will incur in the buying process, rather than the monthly mortgage repayments (which can often be less than monthly rental fees).
Here are a few tried and tested tips to save your pennies and get yourself financially stable to take the great leap towards property ownership.
1. Get your finances in order
You may be up to your eyeballs in debt, or have a few credit cards that you conveniently forget about paying off from time to time. Whatever your current state of financial affairs, get them sorted before you even think about applying for a home loan, let alone searching for a property.
Consolidate existing debts if you can - one outgoing monthly payment is much easier to manage and take control of than several. Keep on top of your credit card bill - not only will you avoid paying unnecessary interest, but it can also help boost your credit score.
Staying within 20% of your credit limit and making monthly repayments is beneficial in that regard.
2. Open a savings account
A great way to save money and to stop yourself from splurging on payday is to open a dedicated savings account. Thanks to the wonders of technology you don’t even need to leave your computer or tablet to set one up - go online, put your details in and hey presto!
Once you’ve set up your new account - and be sure not to have a debit card linked to it - it’s a great idea to set up a standing order to transfer funds across on payday. Take the temptation away with automation! Many savings accounts have better interest rates than checking accounts too, for a bonus.
3. Shop around for the right home loan
Mortgages can be confusing things for the uninitiated. It’s well worth remembering that there are myriad loan options out there, so it’s worth securing professional help to navigate this minefield. When you go to apply for a mortgage, you should be aiming for the lowest interest rates, and make sure to look for competitive offers available through home loan specialists and brokers.
That way you’ll find a mortgage tailor-made for you and your family’s needs and circumstances, and take away some of the headaches traditionally associated with buying a property.
4. Aim for a 20% down payment
Although it is possible to secure a home loan with a lesser down payment, coming to the table with at least 20% means that you will avoid paying mortgage insurance. Private mortgage insurance is there to ensure that the lender doesn’t lose money if the borrower defaults on the loan. Raise that 20% - it’s well worth waiting a while if you have to gather funds.
5. Create a budget (and stick to it!)
Have a long hard look at your monthly outgoings versus your monthly income. There are endless ways to manage and streamline what comes out of your wallet each month.
- Magazine subscriptions? Join a library and read for free.
- Gym membership? Try running in a park or following routines from the internet at home. Or get on your bike and cycle instead of commuting.
- If you’re a caffeine addict, consider buying a french press and some ground coffee and taking them to the office rather than shelling out for expensive cafe bought drinks.
Sacrifice some of your nights out or costly restaurant meals - and remember to note down just how much each sacrifice is saving you - keep all these things goal-oriented. It may seem like you are making little savings, but when you total them up across the board, the money saved is not to be sniffed at as every penny makes a difference.
If your landlord is ok with you to take a roommate on (and if space allows), then go for it - half your rent and bills in one fell swoop! Not only will your main monthly outgoings be split in half, but many domestic products can also now come out of a shared budget (bathroom products, cleaning products, etc.). And who knows, if you’re lucky you may share some interests with your roomie, making those nights in easier to bear!
7. Home flipping
Alterantively, if you're not totally tied to the home you have initially purchased. You could purchase the home to flip it and then use the profit to reduce the posts on your next home purchase. That way you build up capital for a large downpayment o purchase a home you really wanted.
Big purchases require real considerations
Buying a property is an expensive undertaking, so it pays to prepare. Managing your finances using some of the tips above is a great way to prime yourself for homeownership and take the next big step forward with confidence.
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If you enjoyed this post and have time to spare why not check out these related posts and dive deeper down the rabbit hole that is homeownership.
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