For many parents, the goal is simple: to provide a roof over our family’s head. But as the vast majority of us are in “generation rent,” this is easier said than done. While the pandemic has given many families some breathing space, there is always that worry hanging over our heads. The landlord could very well send you packing as soon as all this is done. And rather than moving from house to house every six months to a year, which is not ideal for a family, thoughts turn to buying a home. But this is one of the most complex things anybody in “generation rent” can do. Banks view you as unreliable despite the fact that you’re paying a huge amount of rent every month. As such we have to save up while also paying rent. How can we do this?
Get an Actual Figure of How Much You Actually Need.
While buying a house is cheaper than renting, it doesn’t help in the short-term when you have to save up a considerable deposit. When you think about the 10% deposit of a house that is £200,000, you need to save £20,000. It is possible to find a 100% mortgage, but you would need a guarantor. When you look at the realistic figures of how much you can save in terms of the property, you need to look at your finances and see what aspects need changing. Will you have to make cheaper meals or make certain sacrifices to put that money away? Once you have an actual figure in mind, this gives you a definite amount to save towards.
Open an ISA.
A lifetime ISA is a godsend right now. You can save up to £4,000 tax-free every year. The government will pay a 25% bonus every year up to the age of 50. You can open a lifetime ISA up to the age of 39 and can continue to deposit until you turn 50. So, for every pound you are able to put into the ISA, the government would top it up by 25p. It is one of the best ways to save a lot of money and get a considerable top-up of your investment.
Looking at Your Spending Patterns.
Eradicating debt is crucial. If you have a considerable amount of debt, there are plenty of approaches, such as the debt snowball method you can use to pay off your debt. But when you think about the fact that the bank will lend you a certain amount after they’ve taken off all of your debts, this is why you’ve got to reduce your debt as much as possible. Paying off debt is difficult if you don’t know where to begin but this is the biggest factor in terms of being able to get the home that you want. Because if you have a credit card where you are paying high-interest rates, it can seem impossible to dig yourself out of that hole. Moving the card to a 0% balance transfer can help significantly in this respect.
Saving up money to buy a home is possible, and while it may feel incredibly complex given the current climate, the best approach is to bide your time and look at chipping away at your debt.
