Fewer and fewer of are buying houses these days due to the extreme costs involved. But, I’m here to tell you that home ownership is within your grasp if you’re willing to follow some simple steps…
Remember that the more money you have to offer the bank as a deposit, the more you’ll have to spend on your dream home, and the better (read:lower) the interest rate you’ll be charged. In other words, the more money you can save now, the better your house-buying experience is likely to be.
If you’re a potential first-time buyer looking for advice on how to save money for a house, read on for my top tips…
Start a Dedicated Savings Account
First things first, let’s get organized. Set up a dedicated savings account, into which you stash all your savings. You need to promise yourself that this money is off-limits once it enters the account – money goes in but only comes out for one purpose – buying a house.
Even better if you have online access to this savings account, so that you can watch it grow comfortably over time.
Pay Off Debt
Paying off debt might sound like an odd way to save money for a house, but there are two distinct benefits. Firstly, paying off debt frees up extra money each month – money that you once paid to your creditors but can now be saved towards your deposit.
Secondly, and just as importantly, most lenders take into consideration any outstanding debt that you have when applying for a mortgage. In other words, the less debt you have, the more money the bank is likely to offer you.
The optimum is being debt free when applying, which isn’t difficult to do when you follow my simple five step process for paying off debt.
Repair Your Credit
Many of us have nasty blemishes on our credit record, whether they’re our fault or not. Indeed, many people have been surprised to find defaults on their credit record from companies they’ve never even heard of.
As getting these mistakes removed can take some months, it pays to start looking at your credit early. Get yourself a credit report and work through it, looking to contact any companies mentioned so these can be successfully removed before your mortgage application.
Earn More at Work
Possibly the easiest way to start saving money for a house deposit is by taking on more at your current employer. Ask about additional shifts or overtime, or about pay raises and promotions that might be available to you. You’ll find some handy tips on landing a pay raise here.
However don’t squander that extra income – instead carefully transfer it into your deposit savings account every time you get paid.
Start an Online Business
When you’re paid hourly, or on a salary, there is of course a limit to how much many of us can earn. Anything extra is a benefit, but if you’re really serious about saving for a house as quickly as possible you may want to think more laterally.
Could you, for example, take on a second job that you do at weekends to raise extra funds, or could you do odd jobs in your area such as mowing lawns or walking other people’s dogs?
In my opinion, starting a blog can also be an excellent way to bring in additional income. I, and many bloggers like me, started off with very little knowledge about what we are doing. Soon enough, however, we’re able to bring in an additional income with a minimum of work.
While I wouldn’t expect to start your own blog and then retire by Christmas, blogging can be a very realistic way to earn some extra money – which can be added to your savings account. In time, and with a little luck, it may even grow into a full-blown business in its own right.
Lastly, appreciate that blogging is supremely flexible; you can use any free time you have to write new articles and promote your site, so anyone can do it no matter how busy you may be.
To learn more about how to start your own blog I suggest you take a look at my detailed tutorial here – you’ll be surprised at just how easy it is.
Sell Unwanted Possessions
If you’re anything like most people then you’ve probably got cupboards full of belongings that are surplus to your requirements. All those old books and CDs can quickly be turned into a ready source of cash for anyone willing to put a little effort in.
When saving money for a house, therefore, downsize your possessions as far as you feel comfortable, and list anything of value on Craigslist or your local Facebook “for sale” group to quickly add money to your savings account.
Reduce Your Spending
Reducing your spending has two benefits when saving up for a house. Firstly, and most obviously, the less money you spend each month, the more you’re able to put into savings.
Secondly, banks increasingly look at your monthly outgoings when deciding how much money to lend you. The less you’re spending each month, the more money they’ll feel comfortable lending you.
So go through your last few months of bank statements and consider every expense you have. What could be eliminated altogether, and which ones could be reduced in some way? Many people will find they can shave 10% or more off their monthly expenses by questioning each and every purchase they make.
Bank All Windfalls
From tax rebates to bonuses at work, if you’re lucky enough to receive some kind of cash windfall don’t be tempted to “treat yourself”. Instead, add it to your home savings account for an instant boost in funds.
Make Saving Automatic
The easier you make it to save money for a house, the sooner you’re likely to succeed. I have met too many people over the years who worked hard to earn as much money as possible, only to end up spending it on incidental costs.
To avoid squandering your hard-earned cash, speak to your bank about automatically moving money into your dedicated savings account every time you get paid. This allows your savings account to grow without manual effort on your part, and also protects those funds from accidental spending.
Speak to your Parents
Parents are becoming increasingly important to the house-buying process. In some instances, your parents may be willing to help you save for a house by contributing to your deposit.
Alternatively, an increasing number of young people are opting to move back in with their parents to save money on rent, therefore allowing them to grow their savings account that much faster.
Investigate Government Incentives
Lastly, do your homework and identify any government incentives that you may qualify for. In the UK, for example, both the Help-to-Buy ISA and the Lifetime ISA can help you to save money for a house while receiving a government bonus ontop for all your hard work.
Ask around with other recent house buyers, and see what assistance you might also be entitled to when the time comes.
As you can see, while nobody could claim that saving for a house is easy, there are all sorts of ways in which normal people can rapidly grow a sum of money to use as a down-payment on their first property.
Just follow the steps above and before you know it you’ll be proudly picking up the keys of your brand new home.