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When it comes to purchasing a property, money is certainly important. And whether you’re able to save money easily or not, being able to budget well is going to help you get closer to the desired property you’ve been after. So here are some good tips for budgeting when wanting to buy a property.
Add Up Your Income
Depending on your household size, you’ll want to total up your income to find out how much you can reasonably afford when it comes to purchasing a property. This is important when it comes to taking out a mortgage or loan for your property and how much you’ll be able to borrow. So it’s necessary to crunch the numbers in terms of what the household earns individually and then as a whole. This is useful information that you’ll need to take with you when it comes to meeting with mortgage lenders. They’ll want to know exactly how much you earn in your household so they can give you an idea of how much you can borrow in order to go towards a property. It’s very critical you find out this information, otherwise, if you go househunting for property outside of your price bracket, you’ll only upset yourself knowing you can’t buy what you’ve seen.
Once you’ve totaled up your income, you can now figure out what you can save out of your income to put towards the deposit you’ll need on the property. Don’t make it too difficult for yourself because you want to be able to afford to live on a daily basis. Sacrifices will need to be made in order to save your money so look at what you’ve got to work with and save what you can.
Cut Back On Luxuries
We all have those luxuries in our lives that make our lifestyle a little more enjoyable. And there’s nothing wrong with that, but when it comes to budgeting for a new property, there are, of course, sacrifices that have to be made. Individually and as a couple or partnership, it’s important to know what luxuries you’re spending your money on so that you can then cut back on certain things. It might be your monthly gym membership or a subscription box you get every month. These are things that aren’t your rent or bills but things that you could cut out for a while so that you can put that money towards more important savings like your deposit!
Focus On Your Credit Score
Having a good credit score is important when buying a property, and if it’s bad, then the chances of getting a landed house for sale are going to be more difficult. A credit score can really impact your chances so for the foreseeable future while saving for the deposit, you should work on boosting your credit score. There are a few ways to improve your credit score, and these are:
- Use your credit card but make the amount you borrow small and manageable. The more you borrow is better, but if you borrow too much and spend longer paying it back, that could hinder your score.
- Getting on the electoral register is an easy way of improving your credit score. It improves the way you are viewed by lenders and boosts your chances of securing a mortgage offer.
- Keep credit applications to a minimum. It doesn’t help taking out multiple credit cards, especially if you cannot keep up the repayments.
Credit scores have a habit of dipping and rising regularly so don’t get disheartened if it happens to go down every so often. As long as you’re hitting the good to excellent area then you should be fine.
Make Your Expenses Cheaper
Bills can take a big chunk out of your monthly wages, and it’s something that you, unfortunately, have to pay. However, that doesn’t mean that you can’t save money on the expenses you have coming out every month. With your energy suppliers, their prices will often change or differ to try to entice new customers. Every so often, it’s worth comparing what you pay now, with what you could be paying with other providers. There’s plenty of price comparison websites that you can go on to do this, and once you’ve picked up a few quotes, it may be worth asking your provider to match what you’ve found. They will likely want to hold onto you as a customer than let you go to their competition. So play the customer card to your advantage and try to pay less for the costly gas, electric and water bills.
When it comes to food bills, this can be a major weekly or monthly cost. However, with a bit of extra work, you can find cheaper options to the usual products you buy. Don’t be afraid to try home brands and bulk up on your usuals when they’re on offer. This will end up saving you money in the long run, even if it feels like you’re spending more now. Try to keep a budget when it comes to shopping for food and household items. It can be very easy to overspend, but if you have a budget, you can restrict yourself.
Stay With Family Instead Of Renting
It might be possible to stop renting or move away and back into your family home while saving for a property. It may seem like a step back, but you’ll actually be saving a lot of money from staying with family because they’ll likely charge you less or no rent whatsoever. Just think of how much you could save each month, even if you only did it for six months. That extra amount of income that you save could certainly help towards the deposit or paying towards other fees that come with buying a property. This isn’t a possible option for everyone, but if it’s offered, then it’s certainly worth taking up if you want to.
Get Help With Buying
There are now more possible options when it comes to buying a property that are thankfully helping more people get onto the property ladder. A scheme called Help To Buy is certainly a viable option. It means that you save a certain amount each month, which the government pays an amount towards what you save in total. The maximum you could save is £12,000 but then you’ll end up getting a £3,000 bonus from the government which will certainly come in handy. There’s also shared ownership where you pay less of a deposit in order to own part of the property. Sometimes, doing it on your own may be impossible, but there are plenty of options out there to help give you that extra financial push that you need.
Don’t be afraid to ask your parents or close relatives to see if they’ll be able to front a bit of money that either might be a gift or a loan to pay back. Again, it’s not something that everyone will have the option of but it’s certainly worth asking. You may be surprised!
Budgeting for a property can certainly have its challenges but if you’re strict with your money, cut back on certain expenses and get the right help, you’ll soon find yourself putting down an offer on a property. It’s an exciting life event and one that everyone should get the opportunity to enjoy. So follow these tips and hopefully you’ll be one step closer to owning your own property one day.