Everyone wants to get on the property ladder but, unfortunately, it is a lot easier said than done in the current day and age. If you are looking to buy your first home, no matter where in the world you are based, you will need to accumulate a deposit to secure the property. It can feel like you will never be able to get this money together, but it is achievable if you have a plan. With that in mind, read on to discover some top tips on saving for your first home.
Cut your spending to the bone – There is only one place to begin, and this is by cutting your spending by a considerable degree. Most people spend way more money than they need to, and you will be surprised by how much money you can save by cutting back. The best thing to do is dedicate a considerable amount of time going through your bank balance and determining what you spend your money on each month. You should then investigate each expense further. Do you really need to spend that much? Could you cut back? You may be shocked to learn that you can make savings in areas you weren’t expecting. For example, a lot of people assume that their utility bills are set in stone, but this is definitely not the case. You should ring up your provider to find out whether you can go on a cheaper tariff. Why not reduce the amount of free texts and calls you get per month on your mobile phone so that you can lower your contract payment? Consider shopping at a cheaper supermarket and put your social life on hold for a few months. Everything adds up, so you shouldn’t ignore any type of saving, even if it is only a small amount per month.
Create a plan – You need to have a dedicated savings plan in place. You cannot simply save aimlessly. This is a recipe for disaster. Instead, you need to give yourself a target figure every month to work towards. It is vital that this figure is realistic, even if it means it is going to take you months or even a year longer to save. Giving yourself a mountain to climb won’t enable you to magic the money from out of space. Instead, by putting attainable goals in place, you will be able to reach them every month. This will create a sense of achievement, which will motivate you to keep saving effectively. And, if you have a bit of spare cash one month, there is no harm in adding something extra to the savings pot.
Talk to your parents – Now would be a good time to talk to your parents to find out if they are going to help you buy your first house. Needless to say, this is a tip that is not applicable to everyone. Some people may already know that they aren’t getting any help; others may not want to ask their parents, as they know they don’t have much money. There are then those that don’t speak to their parents, and some people simply want to buy their first property off their own back rather than asking their mom and dad for help. If any of these apply, simply move onto the next point. However, if your parents seem in a position to help you or this is an option you would like to explore, it is definitely worth talking to them. All you need to do is sit down and tell them the situation you find yourself in. Explain that you want to buy your first house, and show them the finances that are entailed. They will take you much more seriously if you have worked out all of the costs. You can explain your savings plan and how you intend to go about it, and simply ask if they are planning to give you any financial help so you can incorporate into the plan. Explain that you aren’t pressuring them to do so and that it is completely fine either way; you simply want to get all of your finances in order. They will be much more likely to appreciate this approach and you never know the results it could yield.
Find out whether you are eligible for any type of government help – As a first-time buyer, it is highly likely that you may be entitled to some form of government assistance. It is definitely worth exploring this option further. Of course, it will depend on where you are based, and your current financial status. In Singapore, HDB resale price is going to be a lot cheaper than buying a private property outright. This is public housing that is managed by the Housing and Development Board (HDB) under temporary leaseholds. It is a great way to get on the property ladder, and something that a lot of people take advantage of. There are similar schemes across the world, which represent a great opportunity for first-time buyers. Another option to consider is whether there are any government grants or loans available. In the UK, there is the help-to-buy scheme. With this scheme, the government will lend you up to 20% of the cost of your newly built home. This means that you will only need to save for a 5% cash deposit. Again, it is worth discovering whether there is any similar type of assistance in your area.
Start as soon as possible – Are you merely exploring the idea of buying your first house, yet you have no intention to do so in the immediate future? If so, you should still start saving today. It is never too early to start saving, and you will find the process a lot easier the sooner you do so.
Budget for all costs – When buying a property, unfortunately, you don’t only need to budget for the deposit. There are a number of other costs you will face before you step through the front door. This includes the likes of buildings insurance, removal costs, solicitor’s fees, survey costs, and initial furnishing and decorating costs. You may also be subject to valuation fees, as well as potential property taxation depending on where you are based. It is important to have a full understanding regarding how much money you will need to pay; otherwise you could find yourself falling short at the final hurdle.
Consider a guarantor mortgage – If you are really struggling to save up the deposit that is required for a mortgage, or you have a bad credit rating and the lender is not willing to accept your application, you should consider getting someone else to guarantee your mortgage. This means that a guardian, parent, or close relative will agree to be responsible for paying off your mortgage if you fail to do so. Needless to say, this is a big commitment and it is not something that should be entered into lightly. It needs to be with someone you trust, and someone that trusts you. These are legally binding agreements, and so the guarantor needs to be in a position where they can afford to pay off the mortgage if you default on the payments.
Explore your saving options – You need to determine where you are going to save your cash. This is important because it could lead to a nice bit of interest being added on top for you. If you are saving on a short-term basis, you have the option of easy access accounts and regular savings accounts. Don’t expect any amazing interest rates, but do explore them before choosing an account. After all, 1% is much more than you may expect when there is a lot of money involved. If you still have several years to go before you buy a house, there are a number of savings accounts that are worth considering. Firstly, you should consider a current account. This may sound odd, however, there are some current accounts today that pay more than savings accounts do, and so it is definitely worth exploring this. You will also have the added benefit of the account being completely flexible when it comes to getting your money out. However, there is one downside, and this is the fact that the higher interest rate will typically only apply to a set limit. On the other hand, there are fixed rate bonds and cash ISAs. The latter is a great place to start, as the interest you get will be free from income tax. You have the option of a fixed rate ISA or a variable rate ISA. The latter is when the rate goes up and down, whereas the former is where you know exactly what you are going to be paid over time.
Hopefully, you now have a better understanding regarding the different options that are in place when it comes to saving for your first property. Take the time to explore any help that is available to you and put together a sensible and realistic saving plan, then you will be well on your way to your first home.
