5 Great Saving Tips for Your Dream Home in a Tough Economy
Many South Africans who are saving up for their dream home found themselves under financial pressure following the last repo rate hike.
The prime interest rate is currently sitting at 10.25%, making it increasingly more difficult for homeowners and home buyers to save money.
Even though we are all living in a tough financial climate, it is not impossible to save. You just need to know how to make your money work for you.
Here are some saving tips to use so that you never have too much month left at the end of your money when buying a house:
1. Free up disposable income
Usually banks require a third of your income to be disposable before approving your home loan.
Setting up a budget can help you to cut back unnecessary costs and free up some money every month.
Ensure that your monthly expenses are paid on time every month and try to close any retail store accounts that you don't use anymore. If you fall behind on your payments, it could lead to a negative credit score which will impact your chances of qualifying for a home loan.
2. Skip that expensive holiday
Planning that trip to Mauritius? Reconsider the vacation.
Instead of planning a luxurious holiday, use that money to boost your deposit for your home.
The bigger the deposit is, the more likely the bank will grant you the loan that you are applying for. This does not mean that you can never enjoy life ever again.
Put a small amount away for entertainment purposes in order to keep yourself motivated and give yourself a break from house hunting.
Just don't overdo it and be cautious with your spending.
3. Use an affordability calculator
Before buying a home, it would be a good idea to use an affordability calculator.
It will help determine the size of the home loan that you will be able to get based on your income and it will guide you towards the right price bracket.
An affordability calculator will also assist in calculating bond costs, transfer costs, and deposit savings amounts. This will help you to determine how much you need to save before you begin the process of bond application.
4. Get pre-qualified
A very important tip!
Pre-qualification gives you an idea of what you will be able to afford before putting in an offer to purchase and it is for free.
This way you can search for a property that you can afford and then plan accordingly. It puts you at an advantage because you have the power to ensure that you never overspend during the month.
5. Set and work towards a deadline
Set a goal and visualize how soon you want to move into your dream home.
Do careful research and calculating to see what you will need to do in order to get there. If you set a deadline in the form of a date, it will become a reality and you will be able to focus on the progress that you are making.
A deadline forces you to action and you have to confront every challenge that is sent your way. Each step during the application process will take a lot of time out of your schedule which will help you determine how long it will take to achieve your goal.
These tips will definitely ensure that you have a financial head-start before you purchase a house.