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Buying a home is a dream for many people and they long to move into their very own space and make it a home. The main obstacle for most is the finances. With stamp duty to pay, solicitor’s fees, moving fees and the deposit, buying a home can be an expensive undertaking. In this article we will take a look at some tips of how to achieve what might seem the unachievable.
How much do you need?
The first step is to understand how much deposit you will need. Working with an independent financial advisor will help with this. They can give you details on how much a mortgage lender is likely to lend you and give you the various mortgage rates for different loan-to-value amounts. Having a good deposit will help you get your mortgage at a cheaper interest rate. Using this information, you can work out how much can you spend on the property and where you want to pitch your deposit amount.
Set yourself goals
Clearly you won’t be able to save the entire deposit in one go, so set yourself a timeframe within which you want to have saved the money. Make sure that the goals are realistic. If, for example you want to move in 4 years and need a £50,000 deposit, you will need to save just over £1,000 per month. Can you realistically afford that? If not, you might need to adjust your goal timeframe, deposit amount or expectations of how much you can afford for your first home.
Dedicated Bank account
Set up a dedicated savings account from which it is hard to withdraw money. That way the money you put into the account is ringfenced and not easily accessible, making it more likely that you won’t be tempted to spend the money that’s in there. At the same time, set up a regular standing order which will automatically transfer the money from your regular bank account to this “deposit” account rather than relying on you to remember. Make it so that the standing order goes out just after you have been paid.
Look at your spending
This is perhaps the very hardest bit, but you will need to take a very critical view on your spending habits. Do you really need every Sky package? Are you using your gym membership? Do you need to eat out 7 times per month? What about that subscription to Anglers monthly? Do you need that limitless phone data package and can you wait a few years to upgrade your phone? Split your spending into needed, e.g. council tax, bills, rent, food and utilities and discretionary. Cut down on your discretionary spend as much as you can and put that money into your savings account. Don’t be afraid to reduce your food shop too. Do you really need the branded products? Can you buy own brand basics instead?
Saving for a deposit can be very hard and requires a lot of discipline, but it is infinitely possible just by making some changes to your lifestyle and putting the money away into a hard to access account. In no time you will be moving into a home of your very own.
