Five Ways To Save For A House
When you first get together with your partner, buying a house feels like one big dream that may never happen. It’s natural to feel that way; a house can be a considerable expense, and you want to be able to own one, but it can feel impossible. With hard work and the right goals, your home-buying dreams can become a reality if you want it to, but saving for a house can feel like an impossible target to hit. A home is not cheap, and they almost always require down payments alongside all the other expenses and insurances that you have to consider. You’re never just paying for your deposit and the stamp duty and solicitor’s fees; there is always something more to consider. It is therefore essential that you consider the steps that you need to take to save for your house. With the five tips below, you’ll be able to buy your dream home in no time at all.
Decide The Budget
Before you can even think about actually buying a cluster house freehold, you have to consider your budget so that you know what you’re savings should be. Just because your budget says, you can afford a certain amount doesn’t mean that the bank will agree with you! The bank may decide that you can afford far less than you think you can, and it’s for this reason that you must calculate all of your costs. You should include the mortgage, taxes and home insurance for the property and you should realize that you could be adding several hundreds of dollars to your mortgage each month.
When you work out what you can afford to pay out, you can then choose what your down payment amount should be. You should always aim for a 20% down payment so that your bank will be happy and you can avoid paying insurance privately. However, this will depend on your credit rating and the cost of the homes in your area, plus whether you are eligible for any government schemes and grants.
Get Rid Of Debt
Housing should never cost you more than a third of your income, or you’re paying too much. Things like car loans and student loans can easily limit the amount of cash that you have to be able to save, so the more debt you get rid of, the more you can put towards your potential mortgage. Paying down some of your debts first will help you to take the pressure off your savings goals, as you’ll be able to pump way more money into your house and secure a much better mortgage. Paying off the debt gives you a lot more money to play with, which is so much better for your home buying prospects.
Start Paying Early
An excellent trick for savings is to look at your possible mortgage payment and your current rent payment and put the difference in those amounts into your savings account. This is a good way of saving cash, and you can treat it like any other monthly bill, and it gets you into the swing of paying for a “mortgage” as you’re already budgeting for it and know what to expect from your budget.
Always Pay Yourself
There are a lot of people out there who wait until they see what spare cash they have before they pay into savings. But the problem with doing this is that a lot of the time it will look like you have no money left! No one wants to see that, so they’ll adjust their savings and have more money for themselves – but that then takes away from their savings! So, calculate what your “leftover” money is after bills and rent, then decide your savings goals FIRST. Make your savings yet another bill, and you’ll find it easier to stick to it.
Reduce Your Costs
Start cutting back on household costs by making a list of all the things that you currently pay for and eliminating those costs that you REALLY don’t need. For example, make a start with 10% of expenses being reduced. So, if you pay $400 a month on “fun” additions like Netflix, internet and movie packages, look where you can make some savings and apply the same technique to all of your expenses. Savings are not a sprint; they take time. Giving yourself that time to save is vital if you hope to be successful with it.