Buying a house requires a considerable budget. You must put yourself in the right conditions. This includes both: preparing your financial portfolio and saving to buy a house. Now, the beauty of real estate is that you do not use your own money to buy something. However, you do have to give out a certain energy so that the banker will entrust you with the money they’ll lend to you.
It’s not only about the energy, it’s also about the fact, the evidence. The evidence that they can trust you here partly comes from the money you bring to the table. Therefore, although it’s not always necessary, it’s greatly recommended that you save money to buy a house.
1. Pay-off your debt
To buy a house, you most likely will have to get yourself into debt. However, to earn a credit, you cannot present a disastrous financial situation. This is why the first step we recommend is to pay-off the debt you already have. That way, you’ll be able to present a clean financial record. Thus, increasing the lendable amount.
Knowing which debt to pay-off first might be a little tricker. However, we do recommend paying-off first the lowest ones, then the ones with the highest interest rates, and finally the highest ones -one by one.
2. Set-up a monthly budget
Budgets are inherent tools for efficient money management, including savings. To cut down expenses, the lasting, easiest way is to stick to a budget. We’ve created a course on managing personal finances 101. You can download it for free by clicking on the button down below and inserting your email.
When you learn to manage your budget efficiently, you become able to put aside higher amounts each month. Cumulated over time, these saved amounts will result in a higher one you can provide to the bank to buy a house.
3. Increase your revenues
There are virtually two ways to save money: cutting down expenses… or increasing revenues. To do so, you can first ask for a raise. If your employer doesn’t want to grant you a raise, consider this: either working harder to achieve your quarterly goals (and get bonuses) or changing job for a higher pay.
Last, you can also start a side hustle. Nowadays, it’s not impossible to make a revenue from online endeavors. Remote working is also pretty popular. You can therefore apply for jobs in completely different locations from home, which may be paid higher than in your state or country.
4. Cut unnecessary expenses
What do we call ‘unnecessary’? This is up to you to define. Try to be straightforward with yourself. If you do follow the program we mentioned earlier in point 2, you will be able to identify clearly what you spend your money on. By adding up all the unnecessary items you spend money on, you’ll be able to identify where to cut your expenses.
A few questions you can ask yourself are: ‘Did I really need it?’, ‘Were there any cheaper alternatives?’, ‘Can I do my way around it?’. Additionally, you can ask yourself these questions prior to buying stuff.
5. Target savings goals
Saving to buy a house may take quite some time, depending on your individual situation. To achieve the desire amount as fast as possible, you must first have… a target amount. Amounts vary. Some say you must provide for 20% of the total amount, others say only 3%. Ideally, you should target a comfortable option for you.
If you have high revenues, you may not require a huge amount of provision to buy a house, since you’ll be able to pay-off your debt through your earnings only. On the other hand, if your earnings are lower, you may want to set aside a higher amount to apply for that mortgage.
6. Boost your savings
In any case, when you’ll start saving money, you’ll quickly realize that dormant money is probably not the wisest move. Therefore, we recommend you set up your money on savings accounts until you reach your savings goal and actually spend that money.
You’ve got plenty of apps and bank services out there to do so. At Finnt, also, we provide interest rates to help you boost your savings. To learn more about our product, please visit our website or register directly by clicking on the button below