Considering buying a house? This is great news! By buying your own home, you can gain a lot more control over your life, as you aren’t worried about potentially having to move properties every time a tenancy or lease comes to an end. You will also find yourself investing in something that you get to keep for yourself, sell later down the line or pass on to loved ones. Of course, buying a house is no minor step. Your home tends to be the biggest asset you spend money on in your lifetime, so you’re going to want to take the process seriously and do what you can to get the best house you can for your money. Here are a few steps that can guide you along this path and help you experience success in your house-buying journey!
Determining Your Budget
When you start seriously considering making the move from renting to buying, you are going to need to know how much you can realistically spend on your house. Having a budget will give you insight into what you can afford. This will then give you the freedom to start browsing houses and seeing what you might be able to get for your money. There are a few different ways you can determine your budget, but those outlined below provide a good place to start out!
Use a Mortgage Calculator
Next, you need to know how much you need to save. This is where mortgage calculators come in useful. When you use a mortgage calculator, it will take your income and essential outgoings into account. It will then determine what is a reasonable mortgage amount that you’re likely to be approved for. There are plenty available online and the majority are free to use, such as tdsr.
Consult a Financial Advisor
Of course, mortgage calculators are a tool that can work well if you input information completely honestly and openly. But a financial advisor will be able to get to know you better as a person, including details concerning your field of work, your job security, your spending habits, and more. All of this information can then be drawn together to conjure up a long-term financial forecast for you. This can help to make a truly realistic budget that you are much more likely to stick to and live happily with. Sure, financial advisors may cost more, but often, they’re worth the investment.
Saving Your Deposit
Once you know how much you can spend on your home, you can get an idea of what kind of mortgage deposit you’re going to have to save. Generally speaking, mortgage lenders expect anything between a 0% deposit to a 20% deposit. Remember, the bigger a deposit you put down, the smaller your monthly mortgage payments will be. So, often, people like to put down as big a deposit as they possibly can. Now, saving a deposit is easier said than done, but here are some tips that can help you to achieve your goal in the best time possible.
Clear Any Outstanding Debt First
The first step you need to take before starting to save your mortgage deposit is to clear any outstanding debt that you may already have. At the end of the day, it doesn’t make sense to save when you already owe money out. By clearing your debts, you can avoid interest payments and funnel this money into your savings instead. Being debt free is also likely to help your mortgage application, as your lender will be able to see that you manage your finances responsibly.
Reduce Spending and Maximise Saving
Once you’re debt free, you’ll have a new slate and can start working towards your goal of saving your mortgage deposit. Now really is the time to start saving! But what steps can you do to maximize this skill and to put away as much as possible? Here are some suggestions that could prove pretty useful throughout this journey!
- Open a LISA – when saving a mortgage deposit, you’re most likely best off putting your money into a LISA, or lifetime ISA. Put simply, this is a high interest savings account that will help you to save your mortgage deposit. Not only does it offer you a space that is separate from your personal finances to save your money in – preventing you from dipping into it – but you will gain interest on the money that is in your account too! This account has a high interest rate in exchange for you building up the money in the account without withdrawing, so make sure to read the terms and conditions surrounding making withdrawals before depositing your money. If you don’t want to be fined for accessing your money if you need it, you can look into other high interest savings accounts with more flexibility.
- Earn Money Online – remember that there are countless ways to earn extra money around your salary online. This means you can work your regular hours and then make some extra cash alongside what you earn from your usual job. Consider setting up an eBay store to sell on old or unwanted belongings. You could start up a freelance role and complete projects on a remote basis for a client or agency.
- Request Overtime – if your workplace allows for overtime, you may want to consider booking some in. By putting in some requests for extra work andb by taking on the extra extra hours on offer, you can significantly increase your income, giving you more disposable income to put aside for extra savings towards your deposit.
Once you’ve completed these steps, you’ll have your deposit saved, you will know how much you’re planning on spending overall and you can start getting in touch with estate agents to begin the official house hunting process. These are exciting times and, hopefully, some of the information provided will help you to get your hands on the house you truly want!