Do you dream of owning your first home? Have you envisioned yourself receiving the keys for the first time, unlocking the door to your personal paradise and feeling accomplished? It’s not a small feat to be able to afford your own home and there are countless good reasons why you would invest. For instance, if you’re starting up a family then it’s a smart choice to save for a large home for your growing family. Life as a tenant in a rented home can be restrictive, so that’s why a lot of people choose to invest in a home as soon as possible so they can pay off their mortgage early in life.
Sadly, it’s not that simple. There are many financial considerations to keep in mind before you even visit your local estate agent, such as your income, your credit history and even your children. Luckily, until that moment comes, there are plenty of smart ways to help you prepare for your future home purchase.
Focus on your credit rating
If you’re going to buy a home, then you’ll likely be forced to take a housing loan in order to afford it. However, you need to ensure you have a fantastic credit rating to even be considered for it, so that’s why you should focus on that as early as possible.
Start by making sure you pay all of your bills on time. Be it your utility bills, rent, taxes or anything else, don’t delay with any of your payments. If you have unused credit cards, then close them so that they don’t negatively affect your credit score. Pay off any outstanding debt you have as well so that the banks know you’re serious about your credit score. Another tip to convince lenders to give you money is to stay at the same address for a long time. Banks get uncomfortable if they see you have a history of moving homes, so stay put for as long as possible while you settle your housing loan.
Start saving money
The biggest expense you need to consider is your initial deposit. This can be quite high depending on the value of the home you’re thinking of purchasing, so it’s important you start saving money as soon as possible before you decide to go all-in. Start a savings account and make sure you’re depositing a fair chunk of your income into it whenever possible.
A fantastic way to see how much you can afford to deposit is to start a budget. You can use budgeting software to count up how much you spend on necessary things like your rent, groceries and insurance payments, then compare it against the income you get. This is also a good way to cut down on your expenditure so that you have more money to contribute to your housing deposit.
If you want to be extra frugal about saving money, then consider your current options as well. If rent is taking up a lot of your savings, then consider moving back in with your family or getting a housemate to share the living costs. Even if you only manage to save a bit per month, it all adds up to your long-term goal.