Purchase of a home can present many financial hurdles. From gathering enough deposits for pre-approval of mortgage prepayment, to maintaining them until going unconditional, and budgeting to cover both repayments and all associated bills, purchasing is no simple task.
Imagine living the life you always envisioned: living your dream home with all the style and space you want! Arriving home each night after a hard day’s work to kick your shoes off in comfort of your own space-it can’t get much better.
Here are a few long-term tips to help you live the lifestyle you deserve…
Create a budget so you can save for a deposit.
Saving more will ultimately lower repayments when purchasing your dream home, due to interest accrual over the life of the loan. A larger deposit not only lowers principal amount borrowed but also reduces your loan-to-value ratio (LTV), leading to better mortgage terms and potentially lower rates.
As such, it is crucial that you establish a monthly budget dedicated to saving for your dream home. There are various methods for budgeting that suit different people; you could do this weekly or monthly; some people find budgeting apps or tools helpful while others prefer traditional means such as keeping a spreadsheet or physical ledger of their spending and savings goals. Consistency is key.
Be mindful that no financial situation is ever stable. Your finances will change over the course of saving for a dream home, often for the better, thanks to pay rises, bonuses or tax refunds that can bolster your savings account. But always be ready for worst case scenarios: unexpected bills could put a pause on your goals by one or two years; an emergency fund alongside home savings should cover three to six months worth of living expenses should help protect you in times of emergency.
Consider automating your savings as well. Set up automatic transfers from your checking account to savings on payday, so that there won’t be an urge to spend it elsewhere. Review and adjust your budget regularly in order to stay on target with your savings goals – every bit helps! Staying disciplined with your budget will bring you one step closer towards owning the home of your dreams.
Boost your income.
There’s always a way. Don’t rely solely on your primary income when saving for your dream home; look into other sources of revenue to increase savings faster. Diversifying income sources is also key for providing financial security during difficult times.
If your field prohibits extra hours or freelance work on the side, taking matters into your own hands could be the key to making extra cash. Buy second-hand items and sell them online – platforms like eBay, Craigslist and Facebook Marketplace offer great opportunities. Look out for undervalued goods at garage sales, thrift stores or auctions and then resell them at a higher price to turn this hobby into something profitable and enjoyable!
Create and sell handmade products such as candles, soaps, jewelry or crafts and sell them at local markets or online marketplaces like Etsy or social media pages to increase income while tapping into your creative side. Furthermore, offer services like pet sitting, house cleaning or tutoring which can be completed on an as-needed basis to bolster income further.
Do your research to make sure the financial gain justifies the time and effort. Once you find your niche and experiment with various methods, you should be able to generate an additional source of income. Keep a record of all earnings and expenses to determine its profitability.
Freelance work can be an incredibly lucrative way to save more. Freelance pays significantly more than usual due to all your pay being sent directly to you instead of going through an employer first. Websites such as Upwork, Fiverr, and Freelancer provide opportunities in fields like writing, graphic design, programming and more – set competitive rates to attract clients while building up your portfolio to attract clients over time – increasing rates as you gain experience and positive reviews!
Consider that increasing your income takes dedication and time management. Make sure your primary job and any side hustles don’t overlap too much to prevent burnout, while perseverance and creativity can significantly boost savings while getting closer to owning the home of your dreams.
Make sacrifices
At all stages in the home buying and owning process, a consistent tip should be to save as much money for down payments as possible and manage mortgage payments comfortably. Spending freely won’t allow you to afford your dream home; without enough left over for paying the hefty bills associated with owning it. Sacrificing now to save enough for down payments will allow you to afford it in future years.
Reduce spending habits to create a monthly leisure or entertainment allowance. To do this, create and adhere to a budget plan, identify expenses you can reduce such as dining out, subscription services and impulse purchases and seek alternatives such as hiking or visiting local parks for entertainment rather than attending expensive club nights out.
Cut back spending on items you don’t need completely. From clothing and technology upgrades, to beauty products, only purchase items if they truly require it. Before any purchase, ask yourself whether the purchase is essential or luxury – if the latter, reconsider and look into ways you could borrow or repurpose items you already own (e.g. instead of buying new clothes, try mixing and matching existing wardrobe pieces or borrowing from friends); for tech purchases, ask whether an upgrade is truly needed, or whether your current device can still last some time; finally consider your current device versus whether an upgrade would suffice – before committing.
Trust me; keep the big picture in mind when saving for a home of your own – every dollar that goes toward saving brings you closer to reaching that goal! When visualizing what joy your dream home will bring you and your family, this can keep your savings plan motivated. Moreover, any sacrifices are only temporary; its rewards will last a lifetime!
Engage your family in this process as well. Discuss financial goals and the sacrifices necessary for reaching them together, which can foster teamwork and shared responsibility, making sticking to your budget much simpler. Celebrate milestones along the way to maintain morale and show each other progress being made.
By carefully considering and prioritizing long-term goals, you can achieve success in saving for the home of your dreams and enjoy its financial security.
Always view spends as a whole, not as individual expenses
So you run out to buy lunch two days each week from work. Your $30 expenditure might not seem significant at first glance, but calculated over an entire year it adds up to $2080; or in three years’ time this totals $6240! When combined with other small spends that add up quickly over time it becomes an impressive sum – enough money that could go toward down payments or home expenses!
As such, always account for spends over their entirety over a year as opposed to individual transactions. This will force you to reevaluate whether a purchase really warrants it; by viewing expenses in this light you’ll gain greater insight into their long-term effects – for instance your daily coffee habit might cost $5 per day, adding up to over $1,8225 annually; in three years it would add up to over $5,475. Even seemingly minor purchases such as Starbucks can quickly add up.
To stay on top of expenses and increase savings, use a budgeting app or spreadsheet to monitor expenses and track spending habits. Categorize all purchases, review it regularly to identify areas for reduction, and identify ways you could cut back. Not only can this practice save more money but it can also make you more mindful about spending.
Consider alternatives to help reduce these costs, such as making lunch at home and taking it with you to work – which can both be healthier and cost-cutting measures. Or make coffee in your own kitchen instead of buying it from a cafe; small steps like these can add up quickly!
Remember, every dollar saved brings you one step closer to your dream home. By being mindful of your spending and looking at expenses as a whole, you can make more informed financial decisions and achieve your savings goals more quickly.
Use an excel spreadsheet to budget your expenses
Excel sheets can help visualize spending. You can either make one yourself or find templates online which make using and understanding one much simpler. Start by listing outgoing expenses that cannot be altered such as mortgage repayment, electricity bill, water bill, internet bill and phone credit fees etc.
Repaying your home mortgage can be daunting, but the result will be worth your while when you get to live in your dream residence.
Conclusion
Financing your dream home doesn’t have to be overwhelming. By assessing your financial health, improving your credit score, saving for a down payment, exploring mortgage options, and getting pre-approved, you’ll be well on your way to making your dream home a reality. Happy house hunting!
