Moving from renter to homeowner is a big step in the life of an adult. Everyone dreams of their perfect home, but few believe they will ever actually see it. The truth is, saving in order to enjoy that dream is easier than you might think. It begins with a few simple steps that you can take today in order to create the conditions for growth that will benefit you tomorrow.
Cut down on the shopping.
The average UK shopping bill eats up 16% of a household’s usable income. This is even greater in the United States and other places around the world. Your weekly shop is likely the second highest draw on your money, after the rent bill, but this can be reduced with smart shopping habits and a commitment to sticking to the essentials.
Shopping around for bargains at a few of your favorite local food stores is a great way to take advantage of competitive pricing that each chain supermarket engages in when converting long term buyers. Entering the store with a list of items needed is another way to keep yourself from wasting precious cash on impulse buys. When it comes to shopping, it’s best to hunt for the bargains and then and get out.
The savings on this one expense can really add up, and a bond or ISA account can act as a safe place to store and grow your extra savings in order to create wealth that can help you purchase that first home.
Swap energy suppliers to lock in a great low rate.
Electric prices in NI are not subject to restrictive lock-ins. As such, you can change energy suppliers whenever your bill begins to rise above the price of the competition. Keeping an eye out for lower rates can really save you in the long run, especially during the winter months when your electricity is forced to heat up the entire home, along with your shower and appliances every day.
There are no eligibility requirements when swapping providers and homeowners or renters who save even just a few pennies per kWh on their overall bill can see a major difference — as large as a few hundred pounds over the course of the year.
Start paying off debts aggressively.
High debt can be a mortgage application killer, significantly curtailing your options as a borrower when looking for a home loan. Interest rates and monthly payments need a good credit score that is comprised of detailed information about your borrowing past. A favorable home loan is separated from less attractive, higher rates by the slimmest of margins.
As well, those with a more checkered credit history may have to provide additional information that can take days or weeks to gather, further delaying the process of moving into that perfect home you have been waiting to buy.
As a prospective homeowner, you should start to aggressively pay off debts as best you can six months or more before you hope to put a down payment on a home. This shows lenders that you are serious about your financial obligations and will take your mortgage seriously, too. The result is a lower interest rate that will save you thousands over the lifetime of the loan. Simply use a mortgage calculator to see the massive difference a single percentage point can make. No more incentives are necessary to get you saving and paying down debt with reckless abandon than this one.
Mortgage lenders want to get you the funding that you need to make your dreams a reality. By getting serious about saving and budgeting before you buy your first home, you can lock-in all the best perks that a new buyer deserves to enjoy.
