If you are making average $30,000 a year, the thought of saving for the 10% home down payment can seem daunting. Yet with a little dedication, time and sheer will; you can get there regardless of age.
We will talk about the concept of down payment before we dive deep into the tips to save on down payment so that you will be able to get a better outlook.
Down payment means a portion of the total sales price of your home, which you will need to pay upfront to buy a house. The rest of the payment to the seller comes from your mortgage which will be approved by the banks upon successful purchase by you (as a buyer). Down payments are normally expressed as percentages which in usual cases are 10% from total property sales price. Normally, 3% will act as booking price with estate agents and 7% which you will have to pay to your elected lawyers in a form of bank cheques in order to proceed with your purchase process.
However, be mindful that the 10% deposit usually applies to subsale properties (properties that you buy from an existing owner). These days there are various numbers of buying schemes that allows you to buy homes without the deposit payment of 10%.
And here comes the tips.
TIPS 1: SAVE MONEY FOR THE BETTER
A great stock investment coach once advised me that, “you are your own fund manager!” – and I feel that it’s downright true. Regardless which investment vehicle you are going to use to multiply your hard earned money, nothing is better than knowing what you are investing into.
As a rule of thumb, most financial advisors would suggest saving your money 10%-15%. In other cases, you might also be able to save up to $1,300 per month from a salary of $3,000 – it’s possible. However, if you want to speed things up then you might want to consider saving up to 25%-30% of your net income. The savings will be further boosted by cutting off unnecessary expenses such as cancelling dining out every night, taking public transport to work, collect your tax refunds, save your bonuses or even as simple as parking in a free zone – it makes a huge difference.
Looking for ways to boost your savings further? Invest your savings or better yet, invest in businesses where you might think would make huge returns!
TIPS 2: DO A SIDE HUSTLE
With the rapidly changing economic landscape of countries globally, the gig economy is getting even more popular these days. Developed countries would try as best as they could to find the cheapest yet highest quality set of skills to get their errands done.
TIPS 3: REFINANCE YOUR PROPERTY
Let’s say you have a house and it seems that the value of your property has gone way up after years of staying. Well, maybe it is high time you should research how many margins of loans you can get out of your home refinancing. It is a good way to consolidate and/or eliminate various debts with various interest rates that you wish would go away and focus on only one stream of debt with one interest rate.
However, be aware that refinancing would also mean to incur a new loan. Do your researches and make sure that you only leverage on loans in order to make more assets and money for you in the foreseeable future. Rich people are rich because they know how to leverage on loans to make their life better financially.
TIPS 4: BUY A CHEAPER CAR OR DOWNGRADE YOUR CAR
It is undeniably hard to restraint yourself from buying that car you have always wanted now that you have the financial means to maintain the car. However, cars are depreciating assets and its values drop every now and then.
If you are able to at least restraint yourself from buying that high-spec Honda City, and instead opt for cheaper alternatives – you will be able to save or invest the monetary differences between the two cars.
Better yet, you would be paying lower installments and lower maintenance fees for a second hand car and have better credit scores in eligibility to own a house!
Have a read down below to know how you can work your way to better credit scores (CCRIS) so that you can get better chances of getting your loan approved by banks :
TIPS 5: CONSIDER HOME BUYING SCHEMES
With the aid of governments and other related bodies, various housing schemes are introduced to help easier purchase of properties for home buyers these days – better yet, without the 10% deposit.
These includes many major government aids for home buyers across the globe such the “Own Your Home” scheme in UK and many major countries.
In addition, these are the schemes outlined in Malaysia to encourage more home buyers:
- Skim Rumah Pertamaku
- Perumahan Penjawat Awam 1 Malaysia
- Rent to own
- BSN MyHome (Program Perumahan Rakyat)
Now that you have reached the end of this article, you sure are serious on finding ways of becoming a home owner. Best of luck to whatever goals you want to achieve by owning a house. Hope this article helps you in your quest. I am excited for you, the reader – for you will be embarking on a journey that will truly be life changing.
“The man on top of the mountain didn’t fall there”