Owning a house is everyone’s dream, but how are you going to save for this house? There are many ways you can save for a house, however, discipline is crucial.
Even if you decide to get a mortgage or a loan for a house, you’ll still have to pay a down payment in cash.
What is a down-payment?
This is the up-front money you’re supposed to pay to secure the house you want to buy.
If you decide to borrow money from a bank or other mortgage lenders, it’s a requirement that you pay 3% to 20% of the money you’ll borrow to get the loan approval.
The down payment is also necessary to secure your lender’s trust. Therefore, you’ll still have to save some money to be able to comfortably pay off the down payment when the time comes.
In addition to that, the lender will also give you the loan if your credit score satisfies him/her- That’s why it’s important to avoid having a negative credit score. He/she will also put into consideration some issues like the value of the home and your mortgage type.
Below are some simple ways you can save for a house.
But first, how much does the house cost?
Having a rough idea of how much you’re supposed to spend will give you a good head start at budgeting how you’re going to save for your future house.
Apart from the price of the house, you also need to know it’s location. Brampton, Ontario is a fine city to live in. Learn more about the best neighborhoods in Brampton.
1. Open an online savings account
Saving for a house requires a lot of sacrifice and discipline because, at any moment, something can come up and force you to spend your savings.
However, technology today has made everything easy and swift. You can now save your money the smart way by simply opening an online account regardless of where you are.
First, you need to be aware of how much you make monthly and how much you plan on spending- It’s a rule of the thumb that you’re supposed to spare at least a third of your income.
Saving money online comes with a lot of benefits since you’ll earn some interest for every coin you save. The money you save, the more interest you earn.
2. Pay off your debts
You can’t start saving for down payment if you have existing debts- This includes car loans, school loans, or even business loans. Additional debt will pull you back. You’ll have to concentrate on paying out all these loans and still have enough to set aside for the down payment.
It’s true, there are some people who can handle paying all their existing loans partially. However, this will slow you down and might even spoil your credit score which will financially paralyze you- Your lenders will no longer be willing to work with you.
So ensure that you clear all your debts before you start saving for your house. However, we know that things aren’t always black and white- There are some grey zones. Click here if you’re still not sure whether or not you should clear your debts before you start saving for a house.
3. Manage how you spend
Everyone likes the little things a lavish life has to offer like getting a cup of coffee or even buying pizzas for lunch. We talked about sacrifice. For you to maximize your saving, you’ll have to cut down some of the unnecessary expenses from your budget.
You can easily do some basic needs like having a cup of tea from home and carrying packed lunch to work instead of getting lunch from a cafe. All these minor moves will have a big impact on your savings.
Have you ever heard of the 50/30/20 rule? Click to find out.
4. Self-regulate your saving
Saving is a pain in the ass for many. Sure, you can spend hours planning how you’ll save a lot by the end of the month, only to end up sending more than you usually do. We’ve all been there.
But worry not, banks nowadays have made saving so easily (like eating a piece of cake). Your savings can now be automatically deducted from your account every month so long as you come into agreement with the bank.
Sure, it will hurt at first. However, you’ll eventually get used to it and won’t feel the pinch anymore.
5. Save any extra benefits
Saving for a house will no longer be a nightmare to you when you learn to maximize your savings.
For instance, if you have an end-of-the-year bonus or tax return, make sure you don’t spend it all on shoes, clothes, or other luxurious things. Instead, save this money- It will eventually make a difference in your total savings.
6. Monitor your spending
The other best way to save for a house is by tracking your expenses. Request for a full bank statement at the end of every month and see how you’ve been spending your money- You’ll be able to monitor every single coin (how it enters and leaves your account). Do this today! Many people are surprised to find out they’ve been wasting hundreds of dollars on things they don’t need.
7. Save partially
At the start of your savings journey, the total sum you want to save for your house might look huge, but remember, Rome wasn’t built in a day (have that on your bathroom mirror).
Start by saving the little you have and watch it grow.
8. Work overtime
Saving for a house will require you to go an extra mile- You can do this by getting yourself an additional job or talking to your current employer for paid overtime.
9. Take advantage of all offers in stores
Yes, we’re asking you to become a discount and promotions freak. During this period of saving, you should take advantage of any offer that comes your way- This will help you with extra money to add to your savings.
Saving, in general, isn’t an easy task, especially if you’re saving for a long term thing like a house. You need to take your time, be patient, and consistent- You must account for any extra coin you get.
I wish you all the best as you start saving for your new house.