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Smart Ways To Save A Deposit For Your First Home

Added: Saturday, April 8th 2017 at 8:11am by annapreston
 
 
 

Buying your first home may seem like an impossible dream for many young people these days, especially if they live in the south east of England where house prices are a higher proportion of average salary than they have ever been. Couple that with continuing strict affordability criteria being imposed by banks, building societies and other lenders, and the need for a large deposit, and it is little wonder some people are not even bothering to save for a deposit but just living for now. However, it has never been easy to save a deposit for your first home so don't let these hurdles put you off – after all the future benefit of financial security will make all the effort now worthwhile. So if you're thinking about starting to save a deposit for you first home, here are some tips will help you towards your goal:

 

Check Your Facts

It helps to know the facts about where you can afford to live, how much deposit you will need and how much you can reasonably manage to save each month. Talk to some lenders about your situation and ask their advice about typical levels of deposit required – it is likely to be anything between 5 percent and 25 percent depending on the lender and your own personal financial situation. In areas with high house prices such as the south east the actual amount of money required for a deposit can be eye-watering. For this reason many parents who may have significant equity on their homes are taking out guarantor loans to help their adult offspring to raise a large enough deposit, but such arrangements should be carefully thought through as they can have implications on the financial well-being of the parents.

 

Remember it will never be easy to get a home loan if you (or your partner) have a bad credit history but providing your finances are in good shape now and you have a good, regular income, you may want to consider loans for bad credit situations , which will be more expensive but once the credit problem is rectified you could switch to a regular loan. Alos remember that banks are entitled to assess your existing financial commitments and spending habits to determine whether you can afford the loan, so make sure yours are in good shape before approaching the banks.

 

 

 

Set Yourself Goals (and monitor them regularly)

Decide when you would like to buy your first home – it could be two years or five years down the line – whatever you think will work for you. Set that goal for a specific date (maybe a birthday or anniversary) then calculate how much you need to save each month to reach that goal. For instance; if you want to have saved £20,000 in 3 years, you need to save around £555 per month every month. Set interim aims every 6 months to check you are still on target for your final goal and adjust your savings upwards if necessary. Make quick and easy changes to help this happen like not buying any new clothes for a month or taking a camping holiday instead of something more expensive.

 

 

 

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