Buying a house is one of the biggest milestones that we will reach in our lives, but unfortunately, taking the leap to get onto the housing ladder is not easy. Sometimes, no matter how hard you save, it seems like an impossibility – especially if you are relying on one income or you have only recently started saving. Read on as we look at why saving for a house seems so difficult, and how you can boost your savings to put you in the best position.
The rising cost of living
One of the factors that is having an impact on how hard it is to save for a house is the rising cost of living all over the world. Post-pandemic, as economic problems occur all over the globe, and governments try to make their money back, costs and services are increasing in price. This makes it harder for us to make money go further, and many of us are seeking help from a short-term loan to help us cope with emergency expenses. it is hard to save when you have no money left over from your primary bills! You might find that saving is becoming more difficult, and making your income stretch is almost impossible – there are ways that you can save even though you’re having to pay more to live, which we will look at in more detail below.
Rising mortgage rates
With the economic issues that many of us are facing no matter where we live, mortgage rates are rising. Those that are already on the housing ladder may be facing an increase in mortgage payments monthly, making it harder for them to manage their money, and struggle to make the payments – but what does this mean for those that are trying to save money to get on the housing ladder? Ultimately, you need to be able to pay a mortgage to be approved for a house, so if you have reached your goal for a deposit, the goalposts may have just changed. As mortgages rise, it becomes more costly for you to purchase a house – you will need a bigger deposit, as well as an income that lenders believe will be able to cover the payments.
Size of deposit
It’s no secret that you will need a fair amount of cash behind you before you can place a deposit on a house – in fact, the more, the better. The bigger the deposit, the less you will have to pay on your mortgage. However, this is an issue for first-time buyers. It can take years of constant savings to build up a pot of money to help you towards your goals, and even then, it may not be enough. This can lead to first-time buyers becoming disheartened and unmotivated, even more so if they are relying on one income to get them where they want to be. With mortgage rates increasing, the size of deposit that you need to become a homeowner is only going to increase.
How to save for a house
Saving for a house is hard, and with changing economic circumstances making it increasingly trickier, many of us will be feeling like our goals are getting further away. Although you can’t change what’s happening in the world, you can adapt your saving techniques and implement new methods to make saving easier.
Automate savings
This is a great way of maintaining consistency with your savings. Using a budgeting or banking app so that you can automate a sum of money to leave your current account each month to move into your savings means that you don’t have to think about it, and you’re less likely to forget! This can help you to steadily build up your savings so that you can work towards a sum that you can use for a house deposit.
Make changes
Unfortunately, you will have to make sacrifices to get your savings to where you want them to be. This could be anything from cutting out unnecessary spending – even something as little as buying a coffee every day before work can add up to a hefty sum of money at the end of the month. If you cut out this habit, you could save a little extra. If you are in debt, you should make sure that repaying what you need to is a priority. Debt holds you back, not only will it have an impact on your ability to apply for a loan, but it will also take up money that you could be using to put towards your savings.
Be realistic
Of course, you want to buy a house as soon as possible, but savings don’t just happen overnight so it’s important that you are realistic with the timescale that you have set yourself. If you’re not in a hurry, you can make the changes necessary to get you there – save consistently and make lifestyle adjustments so that you can buy your first property and reach your financial goals.
