Saving money for the initial deposit on your dream home may appear to be a daunting task. If you have a big deposit, you can get better mortgage deals at low interest. But you need not worry if you cannot come up with the required money. There are many options that you can use to make the investing process smooth and hassle-free.
1. Set a budget
Fix a specific budget based on the down payment amount, loan term, and interest rate. Once you have set the budget, start looking for homes that are on the lower level. Setting a lower target will give you a buffer amount.
You can take care of unplanned and crucial expenses such as any modifications you need to add. Make sure you have enough cash set aside for additional expenses such as repairs, utility bills, maintenance, insurance, and property tax.
2. Identify major repairs
Check out the property for all major repairs that you need to spend. A leaking roof, broken heater, and more can increase your expenses. Find out how much you may need to spend on remodelling the house. Bathroom repairs are the most common expenses for prospective owners.
For instance, if you want to add a whirlpool bath you need to assess the costs involved. Luckily buying a whirlpool bath in London is easier and more affordable. Sites like Letta London offer great deals on baths of different models. You can choose from the available price and models easily.
3. Inspect the property
Conduct a detailed survey of the property. The survey will provide you with an approximate dimension of the land you want to buy. The survey will avoid problems like disputes with your neighbours or buying land that is smaller than what you want.
A survey also helps evaluate the property tax. The extent of available land also influences future additions you can make to the property to increase its value.
4. Go for the best deals
Ever since Brexit, the real estate market has been on the downturn. The situation is not good news for landowners looking to sell their property. Investors were also not willing to take advantage of the low prices.
But now that the Brexit uncertainty has been mitigated, the market is on the rise. You can exploit the situation to your advantage as an investor. Research thoroughly to find the best deals on properties that suit your needs.
5. Find the best mortgage rates
Many lenders are now offering great mortgage rates. You can find the best deals if you take the time to look at what the various lenders in the market are providing. Since the base rate is still at 0.75% investors can save a lot.
For a first-time home buyer, a minimum of 20% of the total amount is needed as a deposit. For instance, a property worth £200,000 will require £40,000 as a deposit. If you are finding it difficult to raise such a big amount, you have options such as
- Switch to mortgages that need about 10% to 15%. But the lower the amount the higher will be the interest rate.
- Use a government scheme for homeowners and first-time buyers like LISA, Right to Buy, shared ownership, and more.
For using LISA (Lifetime Individual savings account) you need to be under 40 years of age. You get to save with a 25% bonus up to 50 years of age. A maximum amount of £3,000 is available for home buyers.
To set up a savings account that is customized to your needs you need to use comparison websites. The comparison sites however give different results so you need to look at multiple sites before you decide on a savings account. Another way is to research the product type and features before you make a purchase.
7. Set up regular payments
Just like you would pay your routine bills every month, set aside savings for the purchase regularly. Setting regular payments will make it a habit and you will not miss the amount much. You can set up a direct debit each month or use a standing order.
The payment setup will avoid the hassle of remembering to make the monthly payments. But make sure you have enough amount in your account when the payment is due.
With the fluctuating property prices, you have the option of saving more, or buying earlier than you had planned. Use the tips we have listed above to save the maximum amount possible. Remember to take advantage of the low housing prices.
Use the best deals on property selling, mortgage rates, and insurance. If you are not worried about the extra effort and time it takes to maintain the property, maintain it yourself. This will save plenty of money as maintenance can take up nearly 20% of the rental costs.