Preparing your finances ready for the property ladder

If you’ve been dreaming about your ideal home for a long time, you’ll be all too familiar with the struggle of saving for a house. It’s not easy, and with deposits still needing to be pretty sizable to get a decent mortgage rate, it’s a long road ahead to get those savings in place.

To put yourself in the best position to purchase a property, you’re going to need to get your finances in order first. Take a look at this guide to improving your finances to get on the property ladder.

Sofa and coffee table set up

Get yourself out of money mess

It’s easy to rack up debt in your 20s – but harder to get out of it. If you’re ready to really try, then you can help yourself out of the red and into the black. Start by facing up to your situation and working out exactly what you owe and start making a plan to pay it back. If you can, try applying for a 0% interest credit card so that you can transfer any balances that you have and maximise your repayments.

If your credit score isn’t great, you might want to consider some no credit check options to help you consolidate some of your debts. You can learn more about this to see if it’s the right option for you. If you do go down the consolidation route – make sure you’re disciplined and don’t build up any further debt.

Improve your credit score

When the time comes to apply for a mortgage, you’re going to need a good credit score to help you secure the best deal. You can build your score while you’re saving to make sure you’re in an attractive position by the time you head to the bank. Some simple things you can do to improve your credit score include:

  • Get on the Electoral Roll
  • Pay your bills on time (putting reminders in your phone will help)
  • Reduce your balances on your credit cards/store cards/loans
  • Avoid making credit checks
  • Make sure any errors are queried and dealt with.

Your score won’t improve dramatically overnight, but if you keep up the hard work, you’ll notice those increases each month and soon get yourself an excellent score.

Change your spending habits

If your motto is more ‘live for the now’, then it’s time to adjust your attitude. It’s very difficult to have it all, so now is the time to make some sacrifices. Instead of saying yes to every night out, every gig and every holiday, you’re going to have to start making choices. Don’t completely deprive yourself, but try to find alternative and cheaper ways to socialise so that you can keep on top of your savings and still have a good time.

If you’re a bit of a shopaholic, then you need to learn to cut back and spend less for the sake of saving. Start setting yourself a shopping budget that you can stick to so that you can still treat yourself, but not go overboard. It helps if you leave any treat spending until the end of the month when you know that you’ve successfully put your savings away. A good tip is to sleep on spending decisions, giving yourself the chance to think a bit longer about whether or not you really need to buy something.

Start a savings account

If you don’t already have one, then open a savings account now. There are some recommended ways for first-time buyers to save, which include different options for bank accounts to get you started.

The Help to Buy and Lifetime ISAs are great schemes for first-time buyers, as every £200 a month you save gets rewarded with a £50 bonus from the government. Read all of the terms carefully before you start putting into one to make sure you know what you can and can’t buy with the scheme. You can also look at more traditional ISAs if you would prefer not to go down the Help to Buy ISA route.

Start budgeting

Starting a budget is one of the easiest ways for you to manage your money and help you get your deposit together. A budget can help you to keep track of all your outgoings, make some cutbacks and help you grow your savings. Your budget needs to be realistic to ensure that you stick to it, so don’t try to do anything too drastic too soon. If, after a few months of budgeting, you find that you’re quite comfortable and can afford to save some more, you can adjust your budget to include additional savings.

If you need some additional help to budget, why not try a budgeting app? A budgeting app is great for helping you to stay on top of your spending, while also helping you to save some extra pennies. A card which offers to round up your money will help you grow your savings pot to help you set a little more aside to pay off debts quicker or to treat yourself.

Ask for grown-up gifts

When you’re planning your dream home, it’s easy to get carried away thinking about how you’re going to decorate and what furniture you’re going to buy. However, it’s likely that most of your savings will get eaten up by your deposit and fees, leaving you with very little to buy furniture, etc. So instead of asking for the usual things for Christmas and birthdays, why not ask for money or gift cards to put towards furnishing your home? This will help make things more manageable and lets friends and family help out with your dreams too!

Saving for your first home is an exciting time for you, and you should be able to enjoy this important milestone. Getting your finances in order will teach you many lessons about money management that will benefit you in the future. Banish your bad habits and secure your savings ready to get you on that ladder and on your way to owning your first home.

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