The housing market is tough and getting into it can be even tougher.
There are many requirements that you need to meet in order to qualify for a home loan, and if you don’t have the right credit score, savings account balance or income level then it can get quite tricky.
But that doesn’t mean it is time to despair. There are some things you can do before applying for a loan that will make your chances of qualifying much higher.
In this article we’ll explore 10 great money saving tips that people often overlook when they’re trying to buy their first home!
Budgets are fantastic because they keep you in line when your self-discipline starts to slip. Sticking to a budget might feel inflexible, but it will give you flexibility later in life when your goals are met.
Budgeting doesn’t have to be a Spartan affair, you can set money aside for all sorts of things, including recreation, but the key is that you NEVER stray from the budget.
If you don’t know where to start, there are plenty of resources which can teach you how to budget.
2. Live with Family
This might not sound overly enticing, but this is actually one of the smartest ways to increase your salary and decrease expenditures.
Of course, living with family isn’t possible for everyone, but it is definitely a great way to save money until you can afford a place of your own.
In many cases, the people you live with may help pay for things like utilities, groceries and rent too.
Just make sure that if it’s a friend they’re trustworthy and won’t steal your belongings!
3. Steer Clear of Credit
You will have no chance of getting a loan if you’ve compiled debt across credit cards.
When saving for a downpayment on a house, don’t use credit cards or buy on credit unless you absolutely must.
There is an increasing understanding that home loan applications can be affected by lenders’ views of their applicants spending history, so even if you do not get into debt, your spending habits with credit cards or Buy Now Pay Later services may have negative implications for your application.
4. Let Your Parents Help
We understand the desire to go out there and “do it on your own”, but it is actually incredibly common for friends and family to help people get in the door of the housing market, either as investments or zero-interest loans.
If your parents can help out with anything that would really be helpful in buying a house quickly, offer them cash for their assistance.
5. Secondhand is King!
Make sure you focus on the main goal: the home. Don’t let your passions run away with you and spend a fortune at Ikea when you can find great items online at sites like Gumtree and even Facebook Marketplace.
Don’t turn your nose up at secondhand stuff, there are amazing pieces out there just yearning for new homes. You can save a bunch of money by putting in a little bit of extra effort and building on a budget.
New appliances, furniture and accessories can be purchased after you buy your first house.
Until then, you can find items on street corners, Craigslist or even just by stopping at yard sales! This will save you hundreds if not thousands of dollars.
6. Be Frugal With Fashion
We all want to look and feel good, but remember it is all about keeping your primary goal in perspective. If you want that house, you may have to go without that expensive dress or those cool boots.
Saving for a house takes sacrifice on your part, and that might mean going out less and buying less new clothes.
You would be shocked how much money people go through each year buying new clothes, shoes and accessories.
Most families go through an incredible amount of clothing and shoes each year, so buying these new items will put you way over budget before the big purchase!
7. The Best Things in Life Are Free
It is a popular saying for a reason and that’s because there is truth to it. You don’t have to spend hundreds of dollars on a night out when you can do a little research and take advantage of free activities in your local area.
Trust us, there is ALWAYS something going on, all you have to do is look for it.
You might find a free concert at a park, a stunning art exhibition or an esteemed orator at a local pub.
Saving for a house does not mean you don’t get to have fun, it just gives you the opportunity to find fun things you can afford!
8. Get to the $20,000 Mark.
Nothing happens before $20,000. This might seem like a lofty goal but if you put it on autopilot and don’t even think about this money then before you know it you’ll have a good chunk of money which will begin to get you close to a down payment!
If your employer has an automatic savings plan at work, ask them to start transferring $20 per paycheck into a savings account that you create just for this purpose.
If they’re not willing to do this then open up an online savings account and set it as the default transfer destination for your paycheck.
9. Down With Debt
Debt can crush your dreams of entering the housing market because it compounds over time, costing you more and more money.
Saving for a house is hard enough without paying interest on debt, so first focus on getting out of debt.
This has the advantage of helping improve your credit score by checking credit boosting companies.
There are also tricks of the trade, which include getting a secured credit card that you can regularly use to raise the amount of debt you have available.
Which will also increase how much money lenders think you’re able to borrow for buying a house.
10. Give Up Expensive Habits!
Buying a house is a big deal, and in the current housing market it will not happen by accident. If you are really invested in buying your first home, there are things you will have to go without to make it happen.
This could be anything from smoking cigarettes, to a tendency to frequent fast food establishments. Maybe you like a beer of seven after work.
These little habits add up, and when you begin to put the money from them towards your target goal, it is amazing how fast that money adds up.
Another great habit is to teach yourself to do things around the house, to learn how to DIY, whenever possible.
Don’t get overwhelmed by the momentous task ahead. If your dream is to buy your own home, it can be achieved through discipline and perseverance.
Saving for a house deposit is all about focusing on the little things which will add up over time.
These things include spending less money due to smart spending, budgeting and implementing frugal financial habits, decreasing debt and increasing your credit scores so lenders are more likely to loan to you.