How much to Save?
Here are some ways you can save up for a mortgage deposit.
1. Saving earlier is better
To make the best of the upfront deposit i.e. down payment, start saving early. You will be considered in less risk in the eyes of lenders if you are able to put a good down payment. This will give you access to cheaper deals. Create a monthly budget and stick to it. Make a print of all your expenses and check mark items in the listing.
2. Use a savings Account
Creating a dedicated saving account for home is one of the best ways to keep a check on your savings. Because you can also be fooled by the number of zeros in your bank account. You may get a wrong idea that you are on track with your savings plan. This quarantine strategy helps off-limit spending by allocation of savings.
3. Save all your Windfalls
If you get a tax refund or a nice bonus on your salary slip… don’t get tempted. This extra cash isn’t for spending. Take this as an opportunity to make gains on your savings for your down-payment. After all you need every bit of cash to work through the savings process. Take these windfalls as a blessing.
4. Downsize before upsizing:
If you are single or renting space more than your requirements then you can save a lot of cash by moving into a small space. This relocation is a smart move and will definitely help you keep pace with your deposit plan.
5. Work Extra Hours to boost Savings
Take every opportunity out of the work or put extra hours to boost your savings. Please make sure that you are eligible to put some extra hours. These extra hours of sweating will reap benefits down the road.
6. Save Less for Retirement
401k, which is employer sponsored, is good but investing in the home is also a long-term benefit. Contribution from the retirement plan can be capped to make up for the down payment and is also an investment worth consideration.
You can also make use of your retirement savings in your individual retirement account to fund the house purchase. You may be eligible for $10,000 without penalties from your retirement fund.
7. Keep Friends and Family in the Loop:
Make sure that you keep your friends and family members aware that you are saving money. Give them a cue whenever possible that you are sticking with a strict saving behavior. In this way, people will remain informed and you will get away with invitations to happy hours or unnecessary weekend shopping gatherings.