Buying your first property, or moving to a bigger one can be both exciting and expensive. Many lenders will not accept less than 20% of the total value of the property as a down payment.
If you want to take advantage of better interest rates, then you’ll need to put down even more.
It can be difficult to save while also having to pay your current bills, so here are some options when it comes to saving for your down payment.
Borrow from the bank of Mom and Dad
One of the most common sources of money from a down payment comes from parents. Whether this is done through a reverse mortgage or from savings, it has helped many young people onto the property ladder or buy their first property to flip.
Of course, if this is an option for you then you are in a fortunate position.
Cut your outgoings
You’ll need to have a really close look at your budget. Find out where you can make savings and channel every dollar you can into your savings account. Reduce costs where you can on rent and bills and cut out any unnecessary spending. It might mean that you are going without some of your creature comforts for a while, but it will be worth it in the end.
Make money on your essential spending by taking advantage of cashback offers. There are a few sites to sign up to which will give you a pre-determined amount back for purchasing through their link.
Give yourself a strict budget and stick to it.
Sell unwanted belongings
Most people have too much stuff. Every closet and draw is full of things we don’t use. Make a bit of extra money by selling them at a local flea market, local Facebook group, or an online auction site. Not only will it help you to declutter your unwanted items, but you can put the money towards your down payment.
Earn extra money
Once you’ve shaved the excess off your budget, you still might not have enough money left over to make a dent in that 20% deposit. In this case, you’ll need to find a way to bring in extra money. If overtime isn’t available at your regular job, then you could take on a second job in the evenings and weekends. Or you could develop a side hustle. There are many things you can try if you have the necessary skills including tutoring, dog walking, writing, cleaning. Look online for ideas of ways that you can earn more money. Be careful not to be lured into any get rich quick scams or multi-level marketing schemes.
Keep your savings in a high-interest account
To get the most out of your savings, don’t just leave them in an account and forget about them. Find a savings account with a higher interest rate that you can take advantage of.
Takeaways
Unless you have a well-paying job or parents who can gift you your down payment, you’re going to have to make a lot of changes to your lifestyle in order to get the money together to buy a house. It will be hard work, but so worth it in the end.