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Saving for your first property is a mammoth challenge. Young people today are facing far more struggle than the previous generations with house prices soaring and the gig economy ruining any chances of achieving a truly stable career.
However, even if you aren’t willing to cut back on avocado toast (or do any of the other absurd things people assume are the reasons for millennials’ struggles), you can start saving for your first property. Setting financial goals will help you achieve greater financial security and even though it might take you a little longer than your parents, there is still a chance at success.
Know Your Target Number
The first problem is that you need to work out how much you will need as a deposit and therefore what you can afford in terms of a mortgage agreement. Unfortunately, working this out isn’t a fixed art as the housing market does fluctuate but you should get an idea of what you will need to start looking.
If you have debt, then you should start by paying and overpaying to reduce and eliminate it. This is really important as the amount of debt you have will influence the value of the mortgage you may be offered. You can use a debt to income ratio calculator to see how you might be affected and then work out a plan for repaying as fast as possible.
Work Out The Added Costs
Even if you have a sizeable deposit saved, there are still a few costs to keep in mind. You will need to factor in surveyors fees and legal fees to ensure that the property is suitable for you to live in as well as a valuation fee to secure your mortgage. You will also have to pay a mortgage arrangement fee.
While these costs might look small in comparison to the value of the property, they do add up quickly so being in the know will certainly save you a lot of agonising later on. Over-saving is always better than under saving so if you have to guess, try to overestimate the amount you will need.
Make a Savings Plan
Some people are naturally frugal and save money more easily than they spend it. This isn’t how everyone likes to live all the time but while you are saving, frugal people are likely to be able to offer some great tips for reducing your outgoings.
The first thing to remember is that you won’t save large amounts at once. Saving takes time and usually starts in dribs and drabs. Finding ways to save every week is usually a good starting place and this will show you just how many different areas can reap results.
Saving for your first property won’t be a smooth ride and there will be times when you have to be really strict with yourself to stay on target. However, getting into a good pattern of saving early will benefit for the rest of your life, no matter what happens. Start now and you might just find that you become naturally frugal too!