There are a few things to think about before you decide you’re definitely going to jump in and buy a house for the first time.
- Avoiding paying ‘dead’ rent money
- Increasing the value of your property over time and eventually making a profit in the re-sale
- No longer having to deal with landlords
- Having the option of keeping your mortgage repayments at a fixed rate year after year (while rent will often increase annually)
- Paying for unexpected repairs and maintenance, as opposed to your landlord dealing with them
- Affordability: if you can’t keep up your mortgage repayments your home will be repossessed
- If the answer to the big home buying question is still a resounding yes, then read on
Save a deposit
There are some fairly obvious benefits to having a sizable deposit when you are a first-time home buyer. It will make it that much easier for you to get a mortgage. Another advantage is that you will immediately have equity in your property. The bigger your deposit, the more protected you are in the event of your property dropping in value. The property would have to experience a drop in value the size of your entire deposit before you were in negative equity.
The first step to saving a deposit for your home is to write yourself a budget. The second step, and the one that will no doubt prove the more difficult, is sticking to that budget.
Evaluate all of your expenditure. Determine what is necessary (rent, council tax) and what you could possibly cut back on or eliminate altogether. Ask yourself:
- Could I eat and drink at home more often instead of going out?
- Do I make a lot of unnecessary and expensive phone calls?
- Do I have too many credit cards? Should I consolidate my debt?
- Do I actually use that expensive gym membership?
- Do I really need that new book, magazine, car, plasma TV, outfit or do I just want it?
When you’re talking about purchasing an item such as a house, it seems silly to be talking about comparatively small things like magazines and nights out. But in the scheme of things, all those small things can add up and make a huge difference to the size of your deposit when you’re buying your first home.