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How to save for a house

How to save for a house
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Tips to Save Money for Buying a House

 How to Save for a House

Planning is important when it comes to buying something as expensive as a home. You need thousands of dollars in your bank account before you start looking for a new home for your living. A traditional mortgage requires you to make a down payment of minimum 20% of the total price of the property. Even though, there are plenty of zero percent down payment options as well, it is always advised to make some percentage of upfront payment to attain good benefits on pl interest and mortgageans. However, it is not possible for everyone to make tens of thousands of dollars of payment to purchase a home. It requires good number of years and proper considerations to be able to accumulate such amount of wealth. So how would you do it? What are the things that you should do in order to save money for buying a home? Let’s find out how you can do that:

 

 

How to Save for a House

1.Stopping Living on a Rent Independently

 

Apparently, an average person spends about $25000 a year on home rents. This is actually equivalent to the amount of the down payment that you require to buy a basic home in a comfortable and safe locality. How about saving your money on it? Consider leaving your rented place and stay with a friend or relatives for at least a year, until you had saved plenty of money to make the down payment. If you’re comfortable, you may even extend the duration of your stay so you’re able to save maximum.

 

Returning home is one of the viable options for everyone. There’s no better and safer place like the place where your family lives. Moving in with your parents for a little while, say for a period of 6-12 months will make a great difference. Living with your parents is much cheaper than staying alone in a rented home.

Alternatively, if your hometown is different from your workplace, then it is advised to stay with your friends. Ask your friends, if they’ve a spare room to let. Even though you’ll be paying rent and expenses, the cost of living will be significantly less than what you would have spent living alone. Moving into a shared house is much cheaper than renting alone.

How to Save for a House

2. Spending Less on Luxuries

 

By this we do not mean to ask you to compromise on the fun element of your life. The only trick is to avoid going to lavish and expensive places every weekend. You may even consider settling down for reasonable hangout spots. If you’ve a habit of traveling by car to your office, consider pooling it with other staff members to save on your fuel and gas bills. Making small changes in your lavish lifestyle will help you save great amount of money by the end of the year. Here is a list of things you can consider doing to save your money:

 

  • · Consider eating more at home
  • · Do your laundry yourself at home
  • · Choose to visit only reasonable hangout places
  • · Save on electricity and water usage
  • · Save on fuel or gas utility with car pooling

 How to Save for a House

3. Make Small Investments In Government Schemes

 

You can borrow some money from your parents or closed ones and invest them in successful government schemes. Whenever you decide to buy a home, simply withdraw the money, along with the accumulated interest. You can use the interest for yourself, and return the borrowed money back to your parents. Most government schemes offer lucrative interest rates for investing in development and infrastructure sectors. You can seek advice from any experienced financial advisor. A financial advisor will help you make the right investment decision on the basis of your needs and requirements.

 

Alternatively, you can use your current savings to do the same. But if your savings are less than $10000, you may not be able to get bigger and better return in one year.

How to Save for a House

4. Focus On Budgeting

 

Budgeting is one of the best solutions to all financial problems. Take out some time to analyze your earnings and expenses. Make a list of all the expenses you incur in a month. This will help you find the areas to cut back and save more. For instance: if you own more than 3 phones in a home, consider bringing it down to one. If you live alone, you need not have more than one connection. Saving even $50 a month on your phone bills will make a huge difference by the end of the year.

 

The key to developing a healthy budget is to work out your ways sensibly. You should also keep a certain amount of money aside to accommodate unexpected expenses of the house.

 

The best way is to make decisions based on your budget. For instance: inviting your friends over for dinner, instead of going out to an expensive restaurant or renting a movie instead of going to a multiplex.

How to Save for a House

5. Put Your Savings to Work

If you are saving money for buying a home, it is advised to make sure that it is actually working in your favor. Money sitting in your bank account will do no good for you with 1% annual interest. If you have a time frame in mind, make sure you plan your saving schemes accordingly. There are a few options that you can approach in order to reach your savings goals faster.

 

For instance: if you plan to buy a new home in next few years, you may want to aim for high profit-yielding savings or money accounts. PPF accounts offer 5%-9% interest on your savings. You can also use your money in certificate of deposit (CD). Even though, the flexibility to withdraw and liquidity has some limitations, but the yields are quite attractive in the long run.

 

So, when next time you ask yourself how to save for a house, do not forget to remember these 5 easy saving tips. These tips will help you reach your saving goals in a fast and smooth manner, helping you make your dream a reality!

How to Save for a House

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James is our CFO. Mr Burke was formerly employed by CRA (the Canadian equivalent of the Internal Revenue Service) as a Tax Auditor of corporate tax returns

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