How Much Can You Save For a House on a Low Income?
Many people are unaware of how much they can save when they save for a house on a low income. For those who are aware of this, they often turn around and use the money they saved to buy something that they can then sell on for a higher price to improve their financial position.
If you are in your late thirties or early forties, you have no control over your income or monthly income. If you’re in your twenties, you have no control over your annual salary and even if you have a steady monthly income, your paycheck could be paid by your employer.
Save While You’re Young
To help save some money while you’re young, start saving for a deposit. When you take out a home loan, your savings can help reduce the amount of interest you pay back to the bank. So, the more money you save up, the less interest you’ll have to pay back.
You could also save up money that you can spend on a big ticket item in your life. To do this, start to save up a down payment when you go to apply for your first mortgage. If you apply for a mortgage on your own, you might not be able to get a home loan with a lower deposit than you would have applied for if you applied through a bank.
If you apply for a mortgage through a bank, you may also be able to get a mortgage at a lower rate. Even if you apply for a home loan on your own, most banks will still require you to have a deposit on your application.
Even if you don’t have a lot of money, it is possible to save for a deposit. It is even possible to save enough to purchase a home on a low income.
Set Some Money Aside
When you are saving for a house on a low income, make sure you set aside money for things like rent and other living expenses. If you save money for a house deposit, you can pay your rent for a year or two and save the rest for your new home.
Save your money for a down payment for your first mortgage. Most people will only save a percentage of their monthly income, so you might have to save an extra 10% of your income every month to get a mortgage on a house with a home loan.
Choose Mortgage Provider Wisely
Get the right mortgage provider to match the amount of money you are saving for a home deposit. Mortgage providers will usually match what you are saving, and you should be able to find out if they will match your savings before you apply for your mortgage.
When you save for a house deposit, you should also save for other bills you will have, such as car payments, groceries, utility bills and credit card payments. This way, when you do get a mortgage, you won’t have to pay off any of these bills at once and you will have them spread out over time.
If you have kids, do not forget to save for their school fees, activities and supplies. With a mortgage, you will only be able to save for a down payment, but do not forget to add those costs to your list of costs to think about.
Save your money wisely. Instead of throwing away all your money on a vacation, save for a deposit.