Getting onto the property ladder can be challenging, especially given the current economic crisis in America. Most mortgage lenders require 10-20% of a property’s value as a deposit, but better mortgage rates mean going even higher. Given how much needs saving, many people need a little push in the right direction, which is where this guide comes in.
Set a Strict Budget
Before you do anything, you need to set a strict budget. Go through your monthly outgoings, including everything from utilities to entertainment. Anything left over can be split between your house savings and a rainy-day pot.
Reduce Existing Rental Costs
When renting a property, a large portion of your income pays for the privilege of living in someone else’s house, and it’s very counterintuitive to saving for a deposit. Therefore, you should do everything possible to reduce your monthly rental prices. For example, you can move into a smaller property or consider house sharing. Alternatively, agree with your parents and move back home for 6-12 months, which may be just enough time to put you over the finish line.
Put Your Savings to Work
Once you’ve got money saved up, you should put it to work by investing it in a high-interest savings account or exploring the trading world, especially if you can afford to be a little risky. For example, you can read James Cordier’s complete guide to option selling to find out how this profitable financial instrument works. Then, with some risk management, extensive research, and a logical option-selling strategy, you can turn a decent profit.
Keep Up with Mortgage Trends
Lenders aren’t blind to the struggles of getting on the property, but they have to set prices according to the wider financial market. In America, mortgage rates are in turmoil because of lingering inflation. Therefore, it’s much more difficult to be accepted for a mortgage or find decent deals. However, if you keep checking in with the latest trends, you’ll have a better understanding of when the best time to apply for a mortgage is.
Ask Family for a Loan
Nobody likes owing money, especially when it’s to family members. However, it may be the best option if you’re lucky enough to have a financially sound relative with enough to lend you money towards the deposit.
Buy Alongside Other People
If you have a serious partner or a group of reliable friends, you could pool your money and come up with a larger deposit. This will mean getting onto the property ladder without struggling for longer, but it also comes with a number of risks to consider. For example, there would be serious complications if one of the people involved couldn’t keep up with mortgage payments.
Saving for a house deposit is difficult, especially when the cost of living is so high. To reach the finish line, you may need to call in a few favors from family and friends, especially if it eliminates your existing rental costs.
