According to the good folk at EXIT Real Estate Consultants (visit their website here), saving up the money for a down payment to buy a home can be problematic for many people and can often prevent them from getting onto the property ladder. It is particularly difficult for those renting a place but are trying to save up the money to buy a property. So, how can you save up enough money to secure a mortgage? Well, below we list a few ideas for you.
Audit Your Finances
Most people are surprised at the savings they can make when they take the time to go through their monthly bank statement. In fact, many find that they have been spending far more than they need to on things such as takeout’s, gym subscriptions that are never used, and luxuries they could probably do without.
Your bank statements will be looked at when you do apply for a mortgage anyway, so limiting spending on unnecessary items will look better. Furthermore, it will help you save money for that down payment.
Pay Off Debt First
If you have credit card debt, you should try to pay this off first. With the savings you make from cutting down on non-essential spending, you could start to pay off your debt and avoid the interest every month. The sooner you pay off this debt, the sooner you will be able to start saving up the money you need to buy a home.
If you are renting right now but are hoping to buy, then downsizing could be the answer to your problem. Finding a cheaper place to rent will instantly free up some money that could be saved. Better yet, could you move back home with your parents while you save up? Many people take this route because it gives them the chance to build up their savings pot much more quickly.
Swap Your Car for a Bike
Unless you absolutely need your car for work purposes, you could consider selling it and investing in a bike to get about town. This would cut down your spending dramatically, and it is better for both your health and the environment as well.
Get More Money
There are a couple of ways that you could try to get some more cash every month. The first is to ask your boss for a raise. Maybe you have been earning the same salary for quite some time now. If so, there is no harm in asking for a raise. But you need to do it right. Avoid asking for more money when your boss is dealing with a crisis or trying to meet an important deadline. Wait until your performance review or when the boss is celebrating a completed project or big order.
The second is to find a way to earn more money on a side hustle. Some people will try to earn money from a hobby they have or will set up their own buy and sell business on a site such as Amazon or eBay. You could even sell some of your old, unwanted items, such as shoes, clothing, and jewelry.
How Much Money Do You Need?
A down payment is not always required when applying for a mortgage as there are a number of government-backed schemes that can help. Despite the common belief that a 20 percent down payment is absolutely necessary, some lenders will accept a down payment of just 3 percent. However, the lower the down payment, the higher the interest rates are likely to be, and you will also need to buy private mortgage insurance.