Owning a home is a major financial milestone, but not one that’s particularly easy to achieve. In today’s economy, saving up for a house is challenging, particularly given stagnating wages and the ever-ballooning cost of living.
If you’re trying to achieve something big, such as owning your own home, it helps to make your goal setting SMART. You want your targets to be specific, measurable, achievable, realistic and time-targeted. This way, you’ll have a clear idea of where you are going and what you want to achieve.
Here’s what you need to do:
To save up for a downpayment on a home, you need to consider seriously cutting back on your spending. In many situations, that requires making significant lifestyle changes. Living somewhere cheaper, for instance, is a good place to start. You also want to reduce the amount of money you’re spending on non-essentials, such as streaming subscriptions and meals out of the home. Other options include getting rid of your car and using a bicycle, or changing your internet plan, using regular broadband instead of fiber.
When lenders hand out home loans, then evaluate your ability to pay based on the monthly repayments. Therefore, it’s critical to find a mortgage with low interest rates as these will bring down your overall cost.
Be sure to work with a mortgage adviser. They search the entire market, looking for lenders offering lower rates and better deals. Sometimes, they have access to mortgage options that aren’t available via regular comparison websites.
Of course, if you want to access the lowest rates, you’ll need a good credit score. Start by taking out a credit card and making the full payment every month. Make sure that you keep your debt-to-income ratio low, and find ways to increase the amount of money you earn each month. All of these factors can help to improve your score over time, sometimes in as little as three months.
If your regular job doesn’t pay you all that much, then you’ll want to look for extra ways to make money on the side. Even if it seems like a lot of effort (which it is), just remember that it’s short-term. You don’t have to do it forever.
How might you earn a little extra? Well, you could try using online gig platforms to earn money in the evenings and at weekends. You could also ask for a raise, go for a better position, or try something else. Keep searching for opportunities and avoid stagnation. Look for the next level up.
It’s tempting to go out for meals in the evening and avoid cooking your own dinner. However, it’s a money pit. You can easily wind up spending 10 percent of your monthly budget on restaurant meals – money you could be saving for a home. Preparing your own meals at home is a much better idea. They’re healthier and cheaper.