Buying a house is one of the largest financial commitments that you will make in your life. Houses don’t come cheap, and planning ahead of your purchase is a necessity. Most people are not fortunate enough to have the resources to make a full cash purchase of a property. This means they will have to save and borrow money. Here is some guidance on how to budget for saving for a house.
Be aware of the costs
The costs involved in buying a house comes as a shock to many people. They are aware that they will need to put down a deposit, but they forget about other costs that are involved. These often include legal fees, agents fees, survey costs and the cost of a removal service. These costs need to be accounted for when planning a budget. You may also need additional funds for decorating or renovation work once you have bought the home.
Seek professional advice
Buying a house can be a complex procedure. There are often hidden costs and unexpected eventualities. By seeking the advice of a professional, the stress of this can be reduced and they will advise you on how to plan your budget, how much you will need, what fees and costs you can expect to pay and any savings that you can make.
Know what your money will buy
You need to have realistic ideas about what sort of home you will be able to afford. This will largely be dependent on your regular income. Find out what you will be able to borrow and what you will need to save at the beginning of your search for a new home and before you start planning your savings budget. This will give you a realistic figure of what you have and what you need to achieve. If your money will not buy what you expected then you need to look at different ways to earn more money or make greater savings to achieve what you want.
It is wise to put some money away each month towards the deposit on your home. The amount will depend on personal income and outgoings, but as much as you can save, you should save. Where you choose to save your money is also important. To make the most of your savings, they need to incur as much interest as possible. Therefore, a current account is not necessarily the best place to save your money. Look at different options, such as high interest savings accounts or ISA’s.
Setting goals for saving will motivate you and give you something to aim for. These can be short term goals and long term goals. For example, you can set a goal for what you would like to have saved in the first month and a long term goal for when you need to have raised the deposit by.
Earn extra money
If possible, try to earn some extra money during the time that you are budgeting for saving money for a house. This will help you reach your target amount much faster than if relying on your regular income alone.
Take control of your finances
Take a good look at your income and expenditures. You may find that you are wasting money on unnecessary items and that you can make additional savings each month. Being aware of your finances will also give you a realistic view of what you will be able to afford in terms of monthly repayments on your house.