The Savings Way to Own a House
Who doesn’t wish to move out of a rented dwelling and own a house in their name? We become independent, start earning, and one of the next goals is to climb the property ladder and own a home.
Even though the mortgage is available but saving for the mortgage deposit and owning a house seems a far-fetched goal. It is a struggle, hard work to reach that goal, but it is achievable.
For any mortgage, you would likely be requiring 10% of the deposit. Any extra deposit percentage will only help you get better mortgage deals and a lesser amount to pay back.
Here are some tips to start saving and enough for a mortgage deposit:
- Huge renting costs-
Why not cut down some amount on renting cost for a while and start filling your deposit saving box little. Stop renting your place will leave you with a little extra savings. What to do if your stop renting?
- Consider moving back with family, which would be much cheaper and hence will allow you to save more. It would be a little difficult and odd for you and your parents both, but a small sacrifice for a while is worth enough.
Or you find a cheaper and smaller place to live. Paying guests are a good option for such cases. Yes, you will not have the full freedom but remember hard work and sacrifice will take you a step closer to your goal of owning a home.
In case you are living alone and have spare rooms at your place, discuss with your landlord and get a roommate. Are you sharing your space will half your rent and even the expenses. Bonus, you will have a company too.
- Reduce your out pocket:
You must cut down on recurring expenses and see where all you can save and then follow it consistently for months. Forming a habit is most important in saving.
- Every single penny counts. You can surely cut down some of the following expenses and add a little to your savings bucket.
- Reducing regular partying and making it occasional will let you save quite a chunk. You may not realize but partying often makes a good leak out of your pocket.
- Cancel some of your holidays: cutting down on leisure travelling will let you save quite a fair amount as you often spend a lot while travelling on hotels, food, shopping, and other luxuries.
- Shift to budget living, limiting your monthly expenses to essentials by cutting down luxuries for a while will add to your savings.
- Consider the option of buying the property together with your loved one, partner or spouse, or a good friend. This way, your mortgage payments will be split in half, and also lesser savings would be required
Just make sure you trust the person, and he/she has no hidden debts from the past.
- One of the ways to save more is to earn extra. Try moonlighting or taking an additional job, a second job. Be strict and disciplined to put all this extra earning as extra savings.
Do not increase your expenses just because you are earning additional. No need for long term work, but a couple of evening shifts a week for six months can help add extra to your savings fund.
- Saving while having debts is exactly like filling up a jar with a hole at the bottom. You will keep putting in your savings, but on the other hand, the interest on your unpaid debt will keep mounting.
You can think of taking the help of “debt consolidation loans” first to clear off your existing debts and then start the savings for a mortgage deposit. Cleared or no existing debts will even help you bag better mortgage deals.
- Get help!
You can avail of the “Help to Buy” scheme offered by various British lenders on newly built properties. This will allow you to get an equity loan to use for buying a house in case of shortage of a deposit money.
Consider asking your parents to lend you some money if they can, which will help you to get your house sooner. Discuss in detail how much you would require and how would you return the money.
The good thing is that you would not have to pay the interest. However, do plan the installments and frequency of payment and stick to it.
In case your parents are not able to help you out, several mortgages allow your parents or someone else to become your guarantor and help you buy the property without depositing the lump sum cash.
Becoming a guarantor usually involves some asset of the guarantor as security for your mortgage for a set period. Hence, a big task to make. This is quite different from the process that direct lenders in the UK follow, i.e., no guarantor loans for instant approval.
You can also avail of the government “help to save” account if you are on a lower-income level or opening a “lifetime ISA” account where you will receive additional payments by governments on your savings.
Start saving for the deposit, and soon you will find yourself peacefully lying in the bedroom of your own house.