Most people dream of owning their own home from a young age. Living in a personal paradise that is all theirs, in which they can raise a beautiful family and live the life of their dreams
But it’s not as simple as all that. If buying a home was simple, everyone would have one, yet young people are struggling more and more to get onto the property ladder. Millennials are starting out with much more precarious financial situations than their parents, and are also dealing with other obstacles like student debt and rising house prices.
Many young people are giving up the dream altogether, choosing to continue to rent flats and apartments instead of purchasing homes. Buying a home is undeniably expensive, and depending on your financial situation, it may seem like an incredibly distant goal. But don’t give up on your dream. There are numerous ways to raise the necessary finances to afford the home you’ve always dreamed of, as long as you are smart with your money and plan ahead.
To get you started on your journey to homeownership, here are ten tips to save up for your first property.
Create a budget
The best way to start saving money for your first house is to create a budget. This budget should detail all of your household income and expenses and be used to keep track of your spending. It will give you a much clearer overview of your financial situation, and allow you to work out how much money you can reasonably afford to set aside for your house over a certain timeframe.
Start saving now
Even if you’re not 100% certain that you want to buy a home, the best thing you can do is to start putting aside money now. Even if at some point down the line you decide it’s not for you, you will still have a large pot of money to spend on anything you wish. But when the time arises when you make that initial down payment, you will be glad you had the forethought to start saving. You should put your money into a savings account or ISA that will accrue interest over time.
Research the housing market
The housing market is a volatile beast, and property prices rise and fall all the time. It’s a good idea to do some research into the murky world of real estate to give yourself a bit of base knowledge that might help you make decisions. With enough information, you will be better equipped to know the best time to buy.
Reduce your expenses
If you can lower your monthly household outgoings without reducing your income, you will be able to save a lot more money by the time you come to buying your home. There are so many ways of scrimping and saving in your day to life. The best way is by cutting out unnecessary expenses. For example, why not exchange your costly gym membership for a cheap pair of running shoes and some free online workout videos? Learn to make nutritious meals instead of spending money on takeaways and dinners out, and prep lunch for work rather than having a store-bought sandwich each day.
Improve your credit score
You may not have had to worry about your credit score before, but when you apply for your first mortgage, you will wish you had. Your credit score tells lenders how responsible you are with your money, and how likely you are to make the repayments on your mortgage. If you have regularly missed credit card repayments and have outstanding debts, your score will have suffered and this will reflect badly on you. There are numerous online services you can use to check your current credit score to determine whether or not you have work to do. You can start improving your credit score by repaying any outstanding debts and making regular credit card payments and paying them each month.
Put down a bigger deposit
As a general rule, the higher a deposit you pay on your home, the less interest you’ll pay on your portage. Although it might be hard to scrape together the initial sum, this will save you a lot of money in the long term and give you access to much more favorable mortgage plans.
Find the best mortgage rate
There are so many different banks and mortgage lenders who will try to convince you that theirs is the best deal. For first-time buyers, all this choice and the technical terminology involved can be overwhelming. It’s a good idea to talk to several different providers before settling on one. This will enable you to find the most suitable arrangement for your particular circumstances, and your research may save you a lot of money.
Take out a loan
Some people go down the route of taking out a loan to afford a home. This can enable you to accrue the necessary funds for your initial deposit, or even to buy your home outright. Whether you get a hard money loan or a conventional one, this can be an effective way of buying a home sooner rather than later, but as a downside, you might be likely to face higher interest rates over time.
Reduce your expectations
Perhaps you’ve always dreamed of owning a massive country house with a vast garden in a beautiful part of town. It sounds lovely, but maintaining such high expectations will set you back financially. By reducing your expectations, you will greatly increase your chances of being able to afford a property. A slightly smaller home with a less spacious garden might make all the difference.
Move to a cheaper location
If you have the freedom to live wherever you like, this opens up a world of opportunity. Different parts of the country and the world vary wildly in the cost of living. By moving to a new city or even country, your money might take you a lot further.
Affording your first home will always be a challenge, but once you have made that first down payment, the feeling of satisfaction and achievement will be monumental. As long as you look after your pennies and keep your options open, there will be nothing stopping you from purchasing your dream house.
