Making the decision to buy your first home can be a thrilling and daunting time. Many first time buyers get caught up in the excitement of having a space of their own and forget to consider their finances. But as the housing market and home loan rates can seem scary for many young home buyers, it can also be easy to be put off by the astronomical expenses and complex processes that come with it.
But help is at hand. By taking a good look at your financial situation and budget, you can leave with the upper hand when it comes to dealing with estate agents and letting brokers, without any worry of not getting the best deal.
Take a look at our excellent tips for first time buyers and our guide to make sure you’re equipped with everything you need to enter the property market will as much knowledge as you can.
Save As Much As You Can
When it comes to buying a house, the more cash you can come up with up front, means the lower your interest rate will be. In turn, this means that your subsequent monthly repayments will be smaller and more affordable. You can either cut back on the daily coffee runs, eating out and unnecessary retail shopping trips to budget your way towards homeownership. Or, at Money & Mimosas, we recommend finding ways to boost your income through side hustles or consulting projects in order to save up for a big purchase.
But don't forget about the added fees that you'll also need to cover when you've picked your dream place. There are legal fees, and even stamp duty that may be applicable and need to be paid. Consider opening a high-interest savings account at a competitive rate. Another great way to save is to set up automatic withdrawals from your current account to a savings account to take some of the pain away from saving such large chunks of money.
Analyze Your Income and Expenses
Home ownership for young people is at an all time low. Contrary to popular belief, it’s not from buying too many avocados and flat whites. If you are serious about buying a house, sit down and analyze your income and expenses to see where you may be able to cut back. It doesn't mean existing off of bread and water for the foreseeable future, but it does mean taking simple steps to plan for the future so that you can live the life you want. Cutting back on small things, like unused subscription services, can make a huge difference in the long run.
It can also be a great idea to compare prices for you current energy and gas suppliers and see if you can get a better deal elsewhere. Your provider can be changed with a quick phone call, and could possibly save you hundreds a year.
Also check to see how much you could reliably borrow from a lender and how much you can comfortably afford to pay back each month. Once you have calculated the figures, then you can make an informed decision about whether or not purchasing a home is the right choice for you.
About Money & Mimosas: Money & Mimosas was started as a passion project by Danetha, a former NFL cheerleader and CFO. After a brunch conversation with girlfriends, Danetha was inspired to launch a resource to learn how they could all enjoy life while being smart with their money. Because who doesn’t want to have their money and mimosas, too?