Buying your first home is an exciting time but it can also be costly with various charges such as solicitor and mortgage fees. There’s usually no larger cost than your deposit which can stretch to the $10,000s. Saving for a deposit can be difficult but with enough dedication, there are ways in which you can accelerate the amount you save.
Have A Clear Goal In Mind
Firstly, you should start to explore the mortgage options available to you so you can workout how much you’ll potentially be able to afford. You can then calculate how much you’ll approximately need for the deposit which is usually based on a percentage of the overall property price. For example, if you know your maximum purchase price that is achievable for you is $300,000 and your goal is a 10% deposit, you know you’ll need $30,000 which you can then divide into monthly saving amounts.
Assess Your Subscriptions
A type of cost that can be easily missed on your bank statements are for subscriptions and memberships that you don’t even use anymore. There are many subscriptions you could have such as for gyms, TV/film services or video games memberships that you may have completely forgotten about. And if each of these are worth around $10 per month as an example, you’ll be saving over $100 per year for each one you cancel. Not only will you save money but it could help your chances of getting a mortgage approved as your regular outgoings will likely be assessed during the process.
Also Assess Your General Expenses
Why stop at just your subscriptions when deciding what costs to cut down? It would be worthwhile to look at your last month or two of bank statements and also look at where you’re spending most unnecessarily. For example, if you find yourself in the habit of buying a coffee for your morning commute, this collection of small expenses can easily build up to a small fortune over time. Additionally, look for cheaper alternatives for the vital expenses you have – such as replacing a taxi with bus pass or even cycling or taking your own lunch to work.
Make The Most Of Not Paying Rent (If Applicable)
If you’re still living with family or in a situation where you don’t currently pay rent, then it can be a great idea to start putting away that amount each month into a separate savings account if possible. So, if you know that your future mortgage payments will be approximately $1,000, by putting that money aside not only will you be saving up to $12,000 per year, you’ll also begin getting used to the disposable income available that will be similar to when you’re living independently.
Utilise Government Schemes
It’s definitely worth checking if the government have any schemes exclusive to first time buyers. For example, in the UK, a Help-to-Buy ISA has been setup to help support first time buyers by boosting savings by 25% up to a maximum of £3,000 – this can be extremely helpful for those looking to purchase their first property.
Saving for a deposit can be one of the most challenging aspects when buying a new home but there is help available as well as various money-saving techniques you can apply to your everyday finances. If, after moving in, you find yourself in need of a small cash top-up, then you can always consider borrowing money from friends/family or alternatively a form of credit such as payday loans may be the best option for you. Being in a position to save before you begin your property buying journey can help alleviate one stress associated with buying and puts you in a great position for when you finally find your dream home.