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Top Five Ways to Save Money when buying a Home

Buying a home is one of the most important – and nerve-racking – financial decisions a person will make in their lifetime. It is easy to feel intimidated, especially if you are buying your first home. Establishing a place for yourself on the property ladder may even seem out of reach for many, but with careful saving and plenty of research, your new home might cost you less than you think. Below are our top five tips for saving money when buying a home.

Consider your Mortgage carefully

It may sound obvious, but taking the time to shop around for a mortgage can bring you huge long-term savings. The interest rate you are eligible for will depend on the size of your deposit and financial history, so getting your finances organised as early as possible is key. Paying down a larger deposit means you are eligible for lower rates, so although it is initially a more sizeable investment, the money saved over the years as you repay the mortgage will be significant.

The minimum deposit amount you can make is 5% of the property’s value, but contributing a 10% deposit will broaden your choices, whilst depositing 25% will let you access the most competitive rates. For this reason, it could be worthwhile spending more time saving, and hold off buying until you can gather a larger deposit. However, in some cases, making mortgage payments is actually cheaper than paying rent, so whether to buy a home sooner or later will depend on your individual circumstances.

Save for your Deposit

Since larger deposits add up to lower mortgage rates, saving for your deposit is a vital for reducing the cost of buying a home. There is no single recipe for successful saving, but there are plenty of small steps you could take to maximise the amount of money you are able to put aside.

You might consider using a Regular Savings Account. A certain, pre-arranged amount must be paid into these accounts each month, usually over a year. With Regular Savings Accounts, your money is locked in for the duration of the year, and you cannot access it, but, because of this, these accounts tend to offer the highest interest returns. You might also consider an ISA (Individual Saving Account), which allows you to save money without paying tax on the interest you earn, up to a certain amount. Again, though, ISAs do not allow you full flexibility when it comes to making deposits and withdrawals.

You might be able to top up your savings with a number of small lifestyle changes, which can quickly accumulate. For example, if you tend to buy a weekly takeaway, this could be costing you around £900 every year – a significant amount, especially when it could be collecting interest! Packing your own lunch for work and foregoing a daily high-street coffee fix are other examples of small actions which can add up to a hefty deposit, and a better mortgage deal.

Look into Government Schemes which could help you

If you are buying your first home, there are also a number of government schemes which can be hugely helpful. The UK government’s ‘help to buy’ scheme assists those with sufficient income to keep up with mortgage payments, but not enough savings to manage a deposit. The ‘help to buy’ equity loan offers first-time buyers who have managed to save a 5% deposit, a loan worth 20% of the value of the property they are buying. This loan is interest-free for its first five years.

A ‘help to buy’ ISA could also be a great option if you are struggling to save enough to buy a home, by boosting the money you have available for a deposit. First-time buyers can earn 2.27% tax-free interest on their savings, to which the government will contribute 25% of the savings’ value up to a certain amount. Many banks offer this scheme, so it is definitely worth checking whether you are eligible.

Remember to take other Fees into Account

Buying a property is a complex process, and additional costs, besides the deposit and mortgage payments you also need to consider home reports from companies such as Your Property Wizard, should be taken into account. Most mortgages incur arrangement fees, which can be up to £2,000, you will have to pay Stamp Duty (a tax paid to the government when houses are bought), and solicitor’s fees must also be covered. On top of this, you may wish to pay for the property to be surveyed before you make your final decision to purchase it.

Factoring in all these expenses is key to ensuring that you have saved enough money. If you are met with unexpected expenses, you are more likely to be forced to dip into other savings, or even run into problems with debt, so it is vital that you take your time saving, and do your research to avoid unpleasant surprises.

Don’t Rush into Decisions

This might be the most effective way to save money when buying a house – not rushing ensures you have ample savings, and know your mortgage options, but it can also reduce the overall price you pay for the property.

Remember that it is the estate agent’s job to present a property to its best advantage, meaning any negative features are likely to be played down. Ensure that you ask plenty of questions, and try to underplay your interest. Doing some research online can also help you gain leverage when negotiating price. For example, the average property is on the market for 8.5 weeks, so if you discover that the property you are interested in has been on the market for 10 weeks or more, the seller might be more likely to accept an offer below the asking price.

Good luck using these tools to find your new home.

6 ways to get your hands on cash – quickly!

Almost everybody has moments when they need to get some cash quickly. If you’re in this position, it can be frustrating or even scary to not have money that you need.

Whether it’s looking at effective ways of selling things, how to get a fast loan or finding other inventive ways to make money, we’ve got you covered:

  1. Working? Ask for an advance

You may or may not feel comfortable doing this, but if your lack of money is hindering your ability to get to work it can often be in everybody’s best interest to talk to your employer first. Payroll departments often have the ability to pay an employee an advance and it can sometimes be repaid over more than one payday, giving you time to get back on top of your finances.

  1. Get a fast loan

Be warned, not all loans are created equal, so be careful to ensure you’re going to a reputable lender whose product is not going to damage your credit rating. There are online comparison tools you can use that will compare loan providers before you’re credit checked, so you don’t have to worry about doing a lot of legwork or lots of applications impacting your chances.

Ensuring you can repay any loan is absolutely vital – meaning this is a good option if you’ve been impacted by a one-off cost. On the other hand, borrowing repeatedly to get you to the end of the month can start a dangerous cycle that’s very hard to escape. Use with caution.

  1. Sell some stuff

If you’ve got items in house that you’re not using they can be turned into cash pretty quickly, especially if the price is attractive. Using online selling resources is a great way to advertise – look for local selling groups on Facebook and list your items on classified sites like Gumtree. There are no selling fees so everything you make goes into your pocket.

You can always offer to sell things for other people too. It can be off-putting dealing with messages, people coming to your house to pick things up or arranging delivery – so if you’re willing to put the time in, then people will happily give you a cut of the profit. Agree it up front, if things don’t sell, you haven’t lost anything.

  1. Call in some debts

If you’ve previously let people borrow money it can be extremely frustrating not to have it back when you’re in desperate need. Pick up the phone to people who owe you and ask for it back, you can appeal to people better nature by explaining your difficult position – or alternatively you can offer them a reduction if they pay you soon. It’s sometimes better to get half when you really need it instead of all money owning when you’re comfortable.

  1. Sell your skills

Selling items on online marketplaces isn’t the only option, if you have a skill you can sell that too. Think broadly, you don’t have to be a qualified professional offering labour, perhaps you could do odd-jobs? Help an elderly or disabled person with a one-off task they can’t manage alone? Could you offer someone a dog-walking or pet-sitting service? Or could you offer to iron clothes?

People are often short on time or people to turn to when jobs need doing, so making yourself available can see you bringing some money in quickly.

Got space?

If you’ve got space, you’ve potentially got money. A spare room can be turned into cash pretty quickly if you’re willing to take in a lodger or someone travelling. Look for resources online that match landlords with tenants and people looking for short term rooms.

Your valuable space isn’t limited to indoors either! If you’re in a good location renting your parking space or driveway can be lucrative too – and people will be willing to pay as soon as tomorrow if you can advertise in the right places. Got a shed or garage? People will happily pay you to store their items.

Act now to avoid repeats

It’s not a great feeling to be in need of money with an empty bank account. If you find yourself in this position frequently, it’s worth looking at putting together a weekly or monthly budget that will help you to stretch your funds long enough to avoid difficult patches.