Advice for starting out on the property ladder
If you watch the financial news regularly, the idea of getting on to the property ladder may feel like a distant dream. But, putting aside the doom and gloom, it doesn’t have to be as daunting as you might think. Buying your first home is exciting – you just need a little preparation and you’ll on a firm foundation to find the perfect place.
How to improve your credit score
If you are currently renting, it might feel that every penny is going to your landlord’s bricks instead of into your own. It’s frustrating, but with some adjustments, you can still save for your deposit.
The first thing you need to do is calculate your finances. As a guide, there are mortgages available that require you to put down as little as a 5% deposit on a property. Mortgage lenders will also want to be sure you have a good credit score and can afford the monthly payments. So, start by obtaining a copy of your credit score and see where it might need some help. You can get this from Experian or Equifax online.
Your credit score is based on your history of borrowing. You can improve it by tidying up your finances, closing down any credit cards you don’t use and ensuring you pay your bills on time. Register on the electoral roll to prove where you live and check there are no mistakes on your credit report. All of these things help boost your score.
Tips for understanding your expenditure
The next step is to identify how you can start saving towards your deposit. You’ll need to understand your financial picture by taking an honest look at what you spend.
- Calculate all of your outstanding debts. Do you have credit cards, overdrafts or loans? Work out your monthly payments and the interest you are paying on each. You may be better off consolidating everything into one payment.
- We often stick to the same credit card for years for convenience. However, interest rates change and offers are available all the time. It might be worth transferring your balance to a card with a lower rate, even when you consider the transfer fee.
- Go through your monthly statement for at least 3 months and be honest about which purchases were a necessity and which were a luxury. By looking at a longer period you can account for times like Christmas or key events and still have a fair assessment of how much you spend.
- Think of ways you can cut down on unnecessary spending. Are you paying subscriptions to Netflix, Prime, Spotify and so on? If you were to cut down on one channel a month, that could go straight into your savings or clear your debts faster. Or, instead of eating out every weekend, plan dinners in with friends, with everyone contributing to a course.
Decide which type of property is right for you
The exciting part of stepping on to the ladder is exploring which property you might choose. Will you choose a flat or a house? Do you want to be close to work or is the commute a consideration? Do you prefer to be in a lively town, or close to the countryside? And, how much space do you need? It all depends on your current circumstances and your future plans, as much as your budget.
Buying isn’t always the best option. While owning your own property will be a good investment in the long term, renting can be a better proposition if your finances are not in the best shape. With a rental, you won’t have house repairs or maintenance to worry about. It’s quicker and easier to move into a rental than buying a property, as you won’t have legal costs and other expenses. And, if you don’t like the area you are in, it’s also easier to move again.
However, when you own your home, there are other advantages. You can decorate as you choose, have all the security of knowing that no one can ask you to leave, and as the house increases in value, you benefit rather than the landlord.
It’s not always as hard as it might seem to get yourself into a buying position. There are various schemes in place to help first-time buyers get started, so it’s a good idea to do some research before you begin house hunting.
For more house owner tips, make sure you read our blogs. We’ve been supporting house moves for years, storing your belongings when you’re in a chain, downsizing, in short term rental or merging two households into one, so we’ve got plenty of tips and ideas to help you navigate your way to your perfect home.