Whether you’re a first time buyer looking for your ideal home, or you’re looking to extend your property portfolio, saving for a house takes time, dedication and commitment. Here are some tips on how to save to buy a house.
Work Out Your Deposit
First things first, before you secure any property you need to have saved for the deposit. This is typically the part that many people struggle with, as they could easily afford the monthly mortgage payments, but struggle to save for the deposit. The house deposit would be a percentage of the price of the home you are wanting to buy. For example, a 10% deposit would be 15,000 for a £150,000 property, which would mean you would need a 90% mortgage. The higher the deposit you can afford to put down, the lower your monthly mortgage payments will be.
Before you begin putting your money aside, it’s important that you have a clear idea of how much you are wanting to save, and how much you can realistically afford. You need to figure out a rough idea of the deposit amount you can afford to save, and you can then figure out an action plan towards achieving this.
Consider your Current Debt
While you may find yourself in a position to save for a house, you also need to consider your current credit score and debts. You may feel that your debts are under control and you can afford to pay them, as well as your savings for a deposit, but it’s important that you get your debts cleared as a priority before saving. You also need to work on improving your credit score before buying a house, if it is negative or could be improved as it is likely you will be rejected by a mortgage lender if you don’t have a positive credit score.
Organise Your Budget Better
One of the most obvious but most effective steps you need to take is breaking down your budget and outgoings. This may consist of small changes you can make to your weekly budget such as cutting down on certain spending habits, or it may require some bigger lifestyle changes. For example, many people move in with their parents or a relative whilst they save for a house in order to help them afford it and reach their deposit amount quicker. Start by identifying exactly where your money is going each month, look at what can be changed and then come up with a detailed saving plan. You will then find that you are able to have a clear goal you can easily strive towards.
Find Extra Ways to Improve Your Finances
Whether you think you can benefit from a second job, or by working overtime in your current position, when you’re saving for a house it’s crucial that you have as much income as possible to dedicate towards your deposit payment. You could also consider switching jobs to a higher paying role or if you work part time, increase your hours to work full time. Every extra bit of income will help you to save for your house.