Saving Money When You’re About To Buy A House

The first time you set eyes on a home that’s up for sale, which meets your standards, you will want to sign on the dotted line right away. It’s quite an amazing purchase to make and quite possibly the single most expensive one you will ever do. But there’s so much risk involved as hundreds of thousands are being swapped hands and in return, you need to know your home is going to pay you back in the long run. It’s important to not look at the process with rose-tinted sunglasses. It’s not easy to save money at every stage but if you know what to do, you can most definitely make the financial hit a lot less harsh.

The bank of mum and dad

Before you go anywhere else for a loan, try your parents. This is one of the most common ways first-time buyers seek cold hard cash when buying a property for their own families. It’s a great way to save money because you can decide together, what the interest rate should be. You may come to the conclusion that you don’t need an interest rate at all. This is leniency you will never get from banks or lenders. 

You can decide on the payment schedule and type as well. Will you feel more comfortable writing a cheque for a lump sum at the end of the agreed time period? Or, do you think you can manage to make small monthly payments directly into their bank account?

However, you will find that there is a much lower limit to how much you can borrow. Lenders and banks can give you hundreds of thousands, your parents might only be able to manage a five-figure number. Therefore you should try to combine a loan from mom and pop with a loan from a financial institution.

Different ways to make a deposit

Before many financial institutions will open their doors to you, they need to know you’re serious. They want to protect themselves from fraud and skittish customers who won’t go through with the contractual agreement. Therefore, you will be asked to agree to pay the deposit on the property first, before you get full access to their financial options. But what kind of ways would a mortgage company accept a deposit from you?

According to a trusted source in the industry, Think Plutus says you can use inheritance money as a means for paying the deposit. You can also use money from the sale of your own property, which is the most common strategy. If you own a second property, releasing equity from that property will also be accepted as payment for the deposit. The sale of assets, gifts and gamblings winnings may be allowed, but it depends on the mortgage company. Some mortgage companies will also accept money from any personal loans. As you can see there are many options for paying your deposit and many times people don’t even know about them.

A government scheme

For those of you that are trying to buy your very first home, there is a range of government plans you may be eligible for. The main one is a help to buy scheme whereby the government goes in on your financial obligation for any loan. They will usually offer to pay you a loan that amounts to around 20% of the home’s value and ask a loan company or bank, to match this. You will have two entities that give you a loan amounting to 40% of the house value and all you need to do is pay a little bit of the deposit to get going. 

This is sometimes the only option for those that don’t have enough money to put down for the deposit. The mortgage company will accept this kind of scheme because instead of a deposit, you have the backing of the government. With their fears abated, you can buy the home at a much decreased financial hit.

Making huge cutbacks

If you want to buy a home, it’s not something you commit to within a year of making a purchase. This takes time and your finances need to be in good order before you make any such move. This requires you to make great cutbacks in your everyday life. Cancel going on holiday for any number of years until you buy a home. This will save your thousands of dollars and if you have plans on raising a family, it will certainly prepare you for buying baby clothes and paying healthcare bills, etc.

It’s in your best interest to also move into a smaller apartment or perhaps into each other’s apartments to save money from rent. This will allow you to cut back on a massive expenditure which cannot be avoided unless you’re not in a contractual agreement. 

If you can find cheaper ways of commuting to work other than driving, start getting used to them. Walk to work, cycle or just get public transport. Sell your car and you won’t need to pay insurance and gas prices.

Budget your life

Even the small things like planning your weekly grocery budget will go a long way to helping you pay for your home. The weeks and weeks that go by, while you’re saving a few hundred dollars here and there, will eventually pile up.

Budget your excesses too, such as clothes shopping and paying for sports events. There’s no area of your life that you cannot budget carefully. Even things like hair products such as shampoo, conditioner and styling sprays, can be cut down on. If you can cut your hair at home, this is also something you should consider making a normal part of your life.

Saving money when buying a home can seem like the impossible dream. On the other hand, if you were to take a careful look at any of these options, you could make a success out of a combination or just one of them. Start off seeing if you can combine a bank loan with a loan from the bank of mom and pop.