How to save money to buy a house
While it may feel impossible to save up enough for a deposit, there are various things you can do to ensure you get on the property ladder sooner than you think.
Set a target
Setting a target gives you something to aim at, it is a good way to focus your efforts and lets you know when you are ready to move onto the next stage of the mortgage process.
2. Decide what size deposit you would like to put down, most first-time buyers aim for 5% – 10%. A Mortgage Calculator may help with this step.
3. Research what other costs are involved in the mortgage process, solicitor fees, stamp duty, mortgage broker…etc.
4. Add it all together and you have your target.
5. If your target is unachievable, go back to steps 1 & 2 and ask yourself if you can compromise with the size or location or if you really need a 10% deposit.
Create a budget
Once you have a target set, it’s time to look at your personal finances to set a budget.
1. Get a piece of paper and split it into three columns.
2. Fill the first column with your monthly income.
3. Fill the second column with what goes out each month, only include consistent expenses, such as gym membership, car finance, school fees, Netflix…etc. You will also need to enter a rough figure for costs that are essential but vary month to month like food shopping, petrol and child costs.
3. The third column is for everything else, this includes expenses that are not essential such as eating out, clothes, holidays and entertainment.
You should now have a good idea of your income Vs your outgoings.
If your outgoings are lower than your income you can work out how much you should be saving each month.
If your outgoings are higher than your income you’ll need to make cutbacks…
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Making cutbacks doesn’t have to be painful. It’s a matter of thinking about the long-term gains over the short-term.
Remember that piece of paper with three columns on you created at the last stage. I want you to look closely at the third column, analyse the column and ask yourself, what in this list can I live without, or cut back on. Then simply commit to cutting it out.
Once you have dealt with the third column, move onto the second one, this will require more effort to cut back on, but will supply great rewards if you can.
Do you need a £60 phone bill each month? Next time you come to renew your contract
When was the last time you actually went to the gym? Would it be better to buy a gym mat and do youtube workouts at home?
Could you survive on Freeview? With catch up services available it’s a good option these days.
Everyone is different and there will be things that you can’t live without and will not compromise on, but you’ll be amazed what you can save if you put your mind to it.
Look after the pennies and you’ll save a deposit quicker than you think!
Take advantage of government schemes
Now you have a target to aim for, a budget plan to achieve your target and have made the necessary cutbacks required, you can start looking for extra help.
The government has introduced a number of different Help to Buy schemes you may be able to take advantage of, all aimed at those struggling to get to where they want to be on the property ladder.
The bank of Mum and Dad
Borrowing money from your Mum and Dad can be a quick way to help buy your own home years earlier than you would without their help. If your parents are willing to help you financially, just be aware that there’s a set procedure to follow, as this money has to be officially
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