Back in the day, owning a home was highly valued and somewhat prestigious because it represented stability, money, and ultimate happiness, but these days, the idea of putting life savings into a single stationary asset is quite daunting and often unachievable because people want to travel and spend more of their money on experiences. But there are ways in which you can still get a foot up on the property ladder, without completely writing off ‘the good life’. With a few simple measures and researching alternative options, owning a home can be something more and more people can achieve.
Be Realistic With Your Search For A Home
It sounds like a no-brainer but often people write-off the chances of owning a home because they only look for places that are out of their budget, refusing to settle for less. This leads to disappointment when their saving efforts don’t get them any closer to the funds they need. To make sure you don’t fall into this trap, it’s important that you spend time calculating your weekly outgoings and expenses, and calculate how quickly you can save a deposit for your ideal home, early on. Set an ‘ultimate goal’ and list possible less-expensive goals you’d be prepared to settle for. Creating a realistic timeline means there is less room for unexpected disappointment or unrealistic goals.
Monitor Expenditures
Once you’ve got some ideal homes in mind, it’s time to start working towards increasing your savings and putting a plan of action in place. For example, it goes without saying that if you’re spending a significant amount of money on luxuries (restaurant meals, expensive holidays, etc.), you’re probably not serious enough about getting yourself onto the property ladder, but there are ways to re-motivate yourself and get on track to spend less and save more, without completely missing out on those enjoyable activities. Have a look at where your leftover money is going at the end of each week, and work out how much of that you can do without. Meaningful savings begin in the simple areas of our lives and if you don’t address the simple things first, you’ll struggle to see results later on when it comes to putting down a deposit.
The ‘Bank Of Mum and Dad’
Of course, even our best efforts at saving hefty amounts of money can still mean it takes years to get the money we need. A potential option to help you get past this is known as ‘the bank of mum and dad’. Consider checking in with your parents, and possibly other family and close friends to see about getting a loan from them. Of course, this set up comes with its own pros and cons and won’t be viable for some, but often if you have trusting relationships, leaning on loved ones for financial favours can be a great way to lift you up onto the property ladder without having many strings attached.
Consider Buying With Somebody Else
This idea won’t appeal to some people, but if you’re keen on owning or part-owning your own home, consider investing with somebody else you know and trust. Think about it - you only need to save half the deposit amount, and therefore work towards getting your property sooner. Of course, making such a big financial commitment with people you know would involve open conversations to ensure you are both on the same page, but long term, you could aim to buy your co-owner’s share of the property if they choose to move out.
Talk To A Mortgage Broker
Some people like the idea of having full control over their research and decision-making, but pursuing homeownership completely independently can be very stressful and you’ll most likely miss out on learning crucial things that can help smooth out the process. Talking to a mortgage broker allows you to thoroughly go through all of your concerns; they can tell you exactly how much you will need to pay monthly and in upfront costs. What’s more, by looking at your income, they can tell you a maximum budget for buying and help you be and stay realistic.
Shared Ownership
Many lenders require a 20% deposit from prospective homebuyers, which automatically writes off a number of people - even those who have access to some financial help from relatives. Thankfully, it’s no longer necessary to follow a one-size-fits-most homebuying process, as there are other options available. Shared ownership schemes cater to those who are unable to fork out 20% deposits, incorporating a third party to help buy the property. These schemes require a low 5% deposit on only 75-85% of a property. After the first 5 years, buyers can use their savings to buy out the third party’s share in your property, and be on the road to be a ‘full owner’.
Become A Homeowner And Purchase Property
So, before you close the door on the dream of homeownership - particularly if you love having more flexibility and freedom that comes with not having such a huge financial commitment - consider the options available to you beyond simply saving for years to put down a 20% deposit.
