Saving to buy your first home can be intimidating – but having a realistic and clear plan can make it feel much more doable. First and foremost, sit down and calculate how much you need to save in total. By far your initial deposit is the biggest thing you’ll be saving towards. You require at least 5 -10% of the price of the property as a down payment while asking a bank to lend you the rest 90 – 95% as a mortgage.
Do some research and get an idea of the property prices in the area you want to buy a home. Depending on the savings you have, use an online calculator to roughly estimate how much you might need to borrow. If you have a limited income, you will be offered a smaller mortgage — meaning you will require a bigger deposit.
Apart from the down payment, there are other costs to factor in:
◉ Valuation Fee
◉ Arrangement/Product Fee
◉ House Survey Fee
◉ Conveyancing Fees
◉ Search Fees
◉ Buildings Insurance
◉ Money Transfer Fees
◉ Land Registry Fees
◉ Removal Fees
◉ Stamp Duty
To realize your dream of buying a home, you should make a plan for how to save up for a mortgage deposit by considering the following 5 tips:
1. Reduce Your Bills
One needs to get a closer look at the outgoing financial resources especially utility bills and other monthly payments to improve your savings. Choosing cheaper broadband, mobile subscriptions, cancelling subscriptions of gyms, clubs, newspapers, and magazines that aren’t being used, can all help to build up your savings faster.
2. Cut Down On Everyday Spending
For savings to increase, one important thing is to look at your daily expenditure. We need to make one list of things that are essential and another of things that are ‘nice-to-haves’. We may be wasting money on stuff that doesn’t really add value or enjoyment to our lives. It is important to reduce spending on unnecessary things to help build that deposit a little bit quicker.
3. Earn While Spending Smartly
Some banks, utility stores, and other shops give incentives to their customers by which one can earn or save more. For example, by using credit cards or debit cards of certain banks you get discounts on different grocery stores. You need to figure out which banks offer better discounts. Similarly, some fashion outlets give considerable cashback if purchases increase to a certain limit. Purchases made from such outlets will help to save more while spending more. Always look for promotions and deals to satisfy your shopping cravings.
4. Assess Your Renting Expenditure
Generally, monthly rent takes away a large part of your salary. The question is whether this expenditure can be reduced or not? The answer is YES! One way to do so is by sharing your rented apartment. Sublet your rented place (with the landlord’s permission of course) and save quite a lot of money each month which can also contribute to your deposit.
5. Make Extra Money
Having a side gig is an excellent way to increase your income. There are several opportunities out there to explore to earn more and hence save more. Part-time business, freelancing, are a few popular ways to make extra money.
