Is saving money ever easy? Especially when you are considering putting a down payment for something major like a new home. However, there is always a way when there is a will to find it. Surprisingly, there are some methods by which you can, in fact, save money without feeling the pinch too much. We discuss a few of these below. The thought of paying a high deposit for a mortgage can sometimes be overwhelming. However, as estate agents in Blackheath will advise, there are certain schemes like the government 95% mortgage scheme, where a much lower deposit (5% only) is required. Also, some professionals like estate agents in Beckenham, even though they cannot offer direct advice, can guide you to their partner firms for finance development.
Meanwhile, we list some easy ways to save money for the purchase of your new home.
Budget: One of the first items on the agenda would be to see how much affordability you have when choosing a new home. If you are a second-time buyer, then you would need to assess how much you would earn from the sale of your current home before budgeting the cost of a new home. It is wise to consider certain unexpected expenditure (legal and admin fees etc.) when drawing up your budget. A carefully thought out budget will form the basis for planning your savings.
Reducing expenses: A sure and safe way to save money is to downsize.
- Check how much you are spending on non-essentials, see if you can cut down on those expenses and divert them to savings instead. If you are a compulsive shopper, consciously control such spending. Perhaps you can also cut down on visits to restaurants, pubs and coffee shops.
- If you can move to smaller accommodation, where you can save on the rent, do so.
- If you have an extra bedroom, consider sharing or taking a lodger. The income from that share of the expenses can go towards your savings. By putting the available accommodation on Airbnb, you can control when the extra space can be used and by whom.
Clear debts: Even though you are trying to save, an important factor is to clear any debts you may have. Lenders first look for your DTI (debt-to-income) ratio. The higher the debt, the less chances of obtaining a good mortgage and you will end up paying a higher deposit with a hike in interest rates as well.
- ISA saving: Open an ISA – individual saving account, taking into consideration which bank will offer the most interest and returns. According to the UK government website on ISAs, no tax is payable on interest on cash in an ISA. Neither is tax payable on income or capital gains from investments in an ISA.
- Recurring deposit: Arrange with your bank to put a standard amount (after you have assessed how much you can afford to do without) away every month into a recurring deposit account. This will build up over the specified period, with interest as well.
- Credit to debit card: If you are a credit card holder, look at changing to a debit card, where expenses will be controlled by the amount of funds deposited with the card provider. This could lead to savings.
Bypass a holiday: Even though holidays offer a good break from routine and an opportunity to visit new places, they often cost quite a bit, after taking into account travel, hospitality and entertainment expenses. By skipping one holiday, quite a large amount of savings can be put away towards your dream home.
Side job: Once home from work, the ideal would be to put your feet up and relax! However, taking on some temporary additional work could lead to lucrative savings.
- The popular “gig economy” offers commonplace temporary, flexible jobs for freelancers and independent contractors, instead of full-time employees. You could use your skills and work from home on a contract basis, with writing, photography, music or art.
- Pet sitting: Some people do not find the time to take their pets on walks or care for them, especially those in the business and travel industry. If you are an animal lover, you could offer to pet sit and earn extra money for something you enjoy doing.
- Testing websites and apps: To ensure they are user-friendly, companies need people to test their websites and apps. You could earn some extra money for your feedback.
Reduce taxes: Not many people are aware of the tax reliefs that they are entitled to. By clarifying these, such as marriage allowance, working from home relief, PETs (potentially exempt transfers), maintenance payments and rent-a-room relief, a tidy sum can be saved.Conclusion: Despite the seemingly huge burden of saving enough to buy a new or another home, there are ways to overcome this hurdle. By consciously striving to meet your target, it will be possible to save enough to fulfill your ambition of buying a new home.
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