Getting a foot on the property ladder is becoming harder and harder. House prices are increasing, interest rates are sky high, and young people don’t have as much disposable income as they used to.
Buying a house is probably the most expensive purchase you will make in your entire life. And your budget will dictate the property you are able to buy. But even if you’re not earning as much as you’d like, it is possible for most people to purchase a home. You just need to be careful with your money and keep your options open. There are plenty of ways you can save money throughout the process and avoid breaking the bank.
To help you get started, here are five money-saving tips for buying your first home.
Know what you can afford
Your house hunt will be considerably easier if you are aware of your financial situation and know exactly what you can afford. This means you can restrict your search to properties within your price range and avoid disappointment later down the line. The best thing you can do is to speak to a mortgage adviser. They will be able to go through your finances with you, and work out how much you are likely to be able to borrow and therefore how much you will need to put down for a deposit.
If you see a house you love that is outside your set price range, don’t stretch yourself beyond your means. You may not be accepted for a mortgage at this rate, or you may end up paying more than you can afford.
Save money
The more money you can pay upfront as a deposit, the less you will need to borrow from the bank. Paying a large initial sum will make it easier to be accepted for a mortgage and save you money in the long run as you will pay back less money as interest. There are plenty of ISAs and savings accounts that will help you contribute to your home fund over time. Work out how much of your income you can put aside each month and use that for your deposit. There may be direct debits such as gym memberships or streaming services you rarely use that could be put to better use paying for your first home.
Improve your credit score
When determining whether or not to accept your mortgage application, the banks will want to take a thorough look at your financial history. Your credit score essentially tells them how reliable you are when it comes to borrowing money and how likely you are to be able to pay it back. If you are in debt or have a history of not paying off credit cards, your score might be low. There are plenty of services you can use to check your credit score, so why not find out? If yours is lower than you’d like, you can improve it by paying off any outstanding debts and using a credit card regularly while ensuring you pay your bill on time.
Negotiate your mortgage
People in all kinds of financial situations take mortgages out each and every day. There are plenty of products available to suit people in all circumstances. If the monthly repayment plan you have been offered is too high, you may be able to negotiate it down. You may be able to extend your mortgage beyond 25 years in order to make the payments or simply stump up a slightly larger deposit. Speak to different brokers and try to find a mortgage that works for you.
Buy a fixer upper
The perfect house is always going to cost an arm and a leg. But when you buy a property, it is then yours to do with as you wish. Some homes need a bit of work to get them into shape, and they generally cost a lot less as a result. If you have the time and the inclination, you could buy a fixer upper and turn it into your perfect home. You may need to call in a plumber, electrician, or plasterer to help you along the way, but many DIY jobs you can easily teach yourself. You’ll save a huge amount of money in the long run and you will learn some valuable skills along the way.
Following these tips will help you to land your first home without spending a fortune. What other money saving tips can you think of? Share your ideas in the comments below.
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