As both rent and property prices are continuously increasing, it can be quite tricky to save up for a mortgage – Money.co.uk looks at the ways you can save money to become a homeowner
Becoming a homeowner is a real investment for the future and can come cheaper than renting in a long-term perspective.
Money.co.uk looked at different categories and gathered some tips that show you different ways to save up more money.
How to cut the costs of your rent
Living with family
Although going back home isn’t for everyone, living with your family (even for a short time) can help you save a lot of cash and boost your savings.
Find a cheaper room or apartment to rent
Alternatively, you can browse websites like spareroom.co.uk or roombuddies.com to find a cheaper flat share or apartment. Living in a flat share means that you will have to share common areas of the house, but also part of your bills.
Think about sharing your home with a lodger
If you live alone and your apartment is big enough to share it with another person, think about getting a lodger to cut down the cost of your rent. However, don’t forget to ask your landlord first whether he is okay with this decision, as some might consider sublet as a breach of contract.
When renting, choose the right size for your apartment
In order to save up on your rent, think about how much space you really need to live in. Is it possible to move closer to work? If so, you could also save more money by cutting down transport costs!
Become a property guardian
Looking for a more affordable alternative to renting? Becoming a property guardian could help you save up for your mortgage. And this is how it works: you keep an eye on a property and in exchange you pay less or – in some cases – nothing in exchange for the responsibility to take care of the building.
You can find all the listed buildings in the UK here.
Different ways to get financial help
Help to Buy scheme
Help to Buy is a government scheme to help you get a foot on the property ladder. The conditions: If you wish to enlist, you have to be older than 18 years and you must use the scheme to buy your own home on a repayment basis (not interest only).
Find out more about the scheme here.
Get some financial help from your parents…
If your parents are willing to help you out, speak to them and sit down to talk about the conditions. In which way would they like to help you, and (how) do they want you to pay them back?
…or alternatively, find a guarantor
Of course, not all parents may be able to lend money to their kids. For some mortgages on the market, you can ask a guarantor to help you buy a property.
However, bear in mind that asking someone to be your guarantor is a big favour they’d agree to, as they must use their home as security and place a large sum of money in an account associated with your mortgage.
Think about your budget
Buy only part of a property
Shared ownership can be a more affordable alternative if you feel like the amount for a deposit is still too hard to achieve.
In short, shared ownership and shared equity schemes mean that you only buy a part of a property and that you rent the rest. Although you won’t entirely own the property, it’s the first step on your way to becoming a homeowner.
Take control over your expenses and your budget
The overall key to saving money is to take the time and look at your budgets and spending every month in order to decide which costs you are able to cut down. Estimate wisely which bills you have to pay every month and how much money you need for unexpected expenses. Are there any bills you can lower by switching to a new provider for example?
To get more money out of your existing savings, think about changing to a savings account with a high-interest rate. Choosing the right savings account depends on how much flexibility you want. However, bear in mind that opting for an ISA and maximising your full ISA allowance each year, you’d be able to pay less tax on the interests you earn.
To find out more visit: https://www.money.co.uk/financial-forecast/