As we mature, the desire for stability increases. Whether it is finding a better stable paying job, a long-lasting relationship or a place to settle in, we all long for a piece of happy place. Buying a home for many is that happy place. A place which we may call our own, a home where memories are made, and families grow up together. In 2018, about 37% of millennials were homeowners, a number quite low compared to earlier generations. This may be due to changing economic times, high student debt and increasing costs of living (without wages catching up).
In 2017, my wife and I landed our first mortgage. We felt like it was an accomplishment but truly, it was simply the result of a dedicated season of discipline and focus on our objective of buying a home. You may find the prospect of buying a home out of reach and almost impossible. However, if you go about it the right way, you can definitely improve your chances and you could be a homeowner at last.
Come up with a plan
First things first, come up with a plan. Speak to a mortgage advisor and find out what kind of mortgage size you’d likely be able to manage on your salary. Remember that bankers are salesmen and most try to upsell you to your detriment. Be cautious and be conservative. The goal is to have a figure that you may start saving toward. Determine how much you’ll need to save each month, and for how many years. Having this written down and set as a goal is a great reminder of what you are trying to accomplish. Your plan will definitely require discipline and a strict adherence to your budget.
Don’t borrow unnecessarily and build your credit score
Having a strong credit score is indispensable when it comes to taking on a loan the size of a mortgage. You certainly do not want to be penalized for 10, 20 or 30 years with atrocious rate. While taking on more debt is not recommended, your specific case may differ, and you may need some type of credit line to build up your score. You can do this by taking out a small loan, credit card, and ensuring you pay it off each month, if not every week. Mobile phone contracts can also help you to build your credit, if you’re accepted for one. The trick to lending money to build credit however, is to be incredibly sensible. You’re not borrowing money because you need money, but simply to show that you can pay it off. These interesting financing facts highlight the problem loans can have on your financial situation so be careful.
While you save money, it’s important to work on your credit score. Luckily, bad credit such as CCJs and defaults will all ‘drop off’ your report after seven years and lenders may no longer have to consider them. So, going forward, make sure all bills are paid on time, and that you’re careful with credit to continue building your score.
Discipline your spending habits with a budget
When you have a savings goal, it’s always worth taking a look at your budget and tracking your financial habits. Knowing what comes in and what goes out puts you in control. If there are places where you’re overspending and luxuries you can live without, start working on reducing those expenses and use that money to save towards your deposit instead.
Find an additional income stream
Finally, earning extra money will certainly speed up your savings goals. While you have the energy still, don’t spend your evening navigating Netflix or doing random unproductive activities. Find opportunities to create additional income for yourself, whether that means starting a home business, doing some freelance work, consulting, etc. It’s about being creative, thinking outside of the norm and doing what the average is not willing to do. You will soon find yourself signing the contract to a mortgage that you are most comfortable with for a house you will love living in.