Buying a home is something many people dream of, but for those living on a tight budget, it might seem like one dream that will never come true. However, there are steps you can take to make it much more likely that one day you will become a homeowner.
Budget
When you’re already on a tight budget, it can be difficult to work out how you can tighten your belt any further, but this is where you need to be meticulous.
Start by writing down any incomings and every single outgoing. Identify anything that is not absolutely essential, like those occasional takeout coffees or meals out and subscription services. Are you buying anything other than necessary clothes or household items, for example?
Writing a weekly meal planner can help you budget your food spending and make it less tempting to order in too.
All of this might sound a little severe but remember, it’s not forever, just remind yourself why you’re doing it when you are tempted to spend or feel down about not having any luxuries.
Be Saving Savvy
Identifying where you can make savings on the essentials is also a wise move. Always shop around and find out if you can get any of your insurances cheaper elsewhere or if other service providers, such as your TV and internet, might cost less if you switch. Compare every purchase instead of turning to the retailer you usually use, and you could make big savings. Even your weekly groceries might cost less if your change stores.
Clear Debt
It’s tempting to just start saving right away, but the best place to start is clearing debt. Tidying up your finances will make you much more attractive to lenders when it’s time to find a mortgage, and once you’ve cleared loans and credit cards, the savings will start to add up much quicker.
Only once you have got yourself straight financially do you start saving for the down payment on your new home. Do your research on who pays the best interest to make the most of your money and then put away as much as you can every month.
Utilize Government Help To Buy Your First Home
The Government of Canada has several schemes to help people get a foot on the property ladder.
There’s the First-Time Home Buyer Incentive offering 5 or 10 percent of your home’s purchase price to put toward a down payment; there is also Home Buyers’ Amount where you can claim $5,000 for the purchase of a home and a third option of Home Buyers’ Plan that allows you to withdraw from your registered retirement savings plans to buy or build your home.
Mortgage Connection aims to make mortgage financing simpler for Canadians and has a detailed blog on Understanding the RRSP Home Buyer’s Plan.
In the UK, there are also some incentives for first-time home buyers such as Affordable Housing schemes, Help to Buy scheme, and the Shared Ownership scheme.
Don’t Lose Faith
If you believe it’s impossible, then it probably will be, so don’t lose faith. It might take longer than you’d like, but if you set yourself a budget, stay frugal and save every penny you can, you will get there in the end.
More ways to help you budget to buy your first home:
