If you are planning to buy a home or property, you should start saving immediately. You could also consider secondary sources of income to complement your monthly paycheck. Saving money for a deposit is a daunting task for a first-time home buyer. You should grasp all the help you can get. Home owner’s grant will help you get started with your project. Based on your circumstances, you may be able to get other grants or stamp duty exceptions. You will need at least a 10% deposit towards your home purchase. You desperately need to grow your savings as fast as possible so that you realize your dream of owning a home sooner. You can use the following formulae to calculate the amount you can afford to borrow:-
The amount you can afford to borrow + deposit saved – fees and charges = amount you can spend on a property
To calculate the amount of deposit you need to have in your savings, you use the following formula:-
The amount you need to buy the property + Fees and charges – amount you can afford to borrow = Deposit you need to save.
- Commit a Fraction of Your Monthly Pay to a Savings Account
Determine a percentage of your paycheck that you can be comfortable setting aside every month. You may, for instance, decide that you will always remit 10% of your monthly paycheck into a savings account. If possible, make the effort to open your designated savings account with a bank different from your home mortgage lender. You may need to skip a few expensive habits like visiting that high-end restaurant for the once a month treat. You should even consider ‘brown bagging’ your lunch from time to time. These little sacrifices make a big difference and are totally worth in the long run.
- Sell Your Items that you no Longer Need on Shops like eBay
Offload the things that you no longer need that someone else might need. Think of that desktop computer that you no longer need now that you own a laptop. That is cash sitting in your store. Sell those clothes that do not fit but are in perfect condition. Sell out some of those curtains you have been piling up over the years, someone needs them and is willing to pay cash for such items. Selling stuff on eBay can earn you hundreds or even thousands of pounds within weeks. You can contribute the proceeds into a savings account once you have sold your items.
- Pay off All of Your Debts
You are probably wondering how that will save you some money for your home deposit and mortgage loan repayments. Well, paying off your debts helps you in two ways. One, you save money on interest payments. Secondly, paying off your debts increases the amount you can borrow. It will also make some of your cash available which you can, in turn, dedicate towards your mortgage repayment. You need to settle your credit card loans as well as personal loans before you go for a mortgage loan.
- Prepare a budget and slice down expenditure on luxuries
Tightening your budget is no fun way of saving money for your home deposit and mortgage repayments. However, it is effective in the long run. Avoid impulse buying and you will instantly see a significant change regarding how much you can afford to save. You can save a few thousands over a 12 months period.
- Get a Part Time Gig
Look for extra work that you can do in the evenings and maybe on the weekends. You can pull in extra 2000 a month (24,000 a year) working a few extra hours a week. Consider freelance writing, graphic design jobs or tutoring high school kids after school hours and on the weekends.
To succeed with you savings for a deposit and home loan repayments, you need to be highly disciplined and stick to your savings plans.