Many of us grow up with an ambition to become a homeowner one day. It’s more difficult than ever before to take that first step onto the ladder, but there are ways of making your goals more achievable. If you’re hoping to buy your first property in the near future, here are some steps to take now.
Start saving
When you’re young and fancy-free, it can be tempting to spend money as soon as it hits your account, but saving is always beneficial. The sooner you start saving, the better if you want to buy a house. Nowadays, you need a substantial downpayment to invest in real estate. If you can put money away each month, this will stand you in good stead to hit your target sooner. If you don’t already have a savings account, do some research online, compare different banks and look for the best deals. It’s wise to read the small print before you deposit any money, as some accounts are more flexible than others. If you want to be able to withdraw money, for example, make sure you don’t choose an account that prohibits access for a period of time.
Budget
Many of us are guilty of spending money that we don’t need to and being a little frivolous. If you’re on a mission to try and save money for a deposit on a property, it’s incredibly beneficial to start budgeting now. Drawing up a budget enables you to see how much money you can afford to spend and to allocate additional funds to your savings account. You can use a pen and paper, design a budget spreadsheet or download apps to help you manage your money. To work out your budget, make three columns. In the first, write down payments you expect to come into your account in the next month. In the second, note down any regular outgoings, for example, rent, your phone bill or your car insurance. In the third section, add any one-off costs you’ll incur in the month ahead, for example, a birthday gift for your partner or spending money for a weekend away. Once you’ve got the figures in front of you, you’ll be able to determine how much of your income is disposable. You can then set a budget for saving and spending.
Research mortgages
Unless you can buy an apartment or a house outright, you’ll probably need to take out a mortgage. Before you start searching for properties, it’s useful to have an accurate idea of how much you can afford to borrow, so that you can narrow down the options based on your budget. Using an affordability calculator, you can work out how much you can borrow and get an idea of how much you’ll be paying back if you do choose to proceed with a property purchase. When applying for a mortgage, it’s wise to avoid stretching yourself too far financially and to make sure you can afford the monthly repayments. You don’t want to be stressed all the time and worried about paying bills. Once you have a figure in mind, this will help you find properties you can afford. The next step is to explore the possibilities and try and find a home you love. Contact real estate agents, and be prepared to negotiate on the price.
Reducing living costs
If you’re keen to get onto the property ladder, it’s beneficial to try and reduce your living costs so that you can save more and boost your down payment value. The more you can put down on a house or flat, the less you’ll have to borrow. There are several ways to cut back on spending, and often, making simple changes can hold the key. Using your budget, look for areas where you can claw back funds, including luxury items and subscriptions you don’t need or use. You can reduce the cost of socializing by choosing different activities and you could also lower charges for your phone and any household bills you incur by shopping around for better prices. It might also be possible to save on getting around and traveling to or from college or work by using public transport and buying season tickets.
Do you dream of owning your own home one day? Even if this seems like a fantasy at the moment, there are steps you can take now to improve your chances of achieving your goals in the near future. Start saving, work to a budget and do some research about mortgages and borrowing. Try and cut out unnecessary expenses and get used to transferring money to your savings account on a regular basis. Even a small deposit every month could make a difference.
