Buying a home is exciting. But, it’s also a big financial commitment. This is why it’s important for you to prepare yourself financially and mentally before you buy. This will then allow you to increase your chances of home loan approval and increase your borrowing power. Let’s look at how you can beat any financial or mental pressure that you could possibly encounter when buying your first home.
When we have less financial commitments we tend to be more spontaneous with our spending. We buy what we like, when we like, and don’t even give it a second thought. But, if you’re seeking to buy a home, then that extra spending money you have will need to go towards saving a home deposit.
So rather than spending any residual income you have, start planning ahead. Create a savings plan. Work out how much you’re spending and what you’re spending the money on. Then work out where you can save money. For instance, buying your lunch and a morning coffee can cost $20 to $30 a day. However, making your own lunch and taking coffee from home can save you $10 to $20 a day. Over a 5-day working week this is $50 to $100, which adds up to $2,600 to $5,200 a year.
Once you’ve worked out where you can save, open up a high interest savings account. This account will allow you to earn interest on the money you save. This will help you to save more over a shorter time frame. Shop around for the highest interest rate, but also make sure you look at terms and conditions of the account and how interest is paid. This will allow you to work out which account is best for you and your circumstances.
If you’re considering buying big ticket items such as a fridge, washing machine, car or TV, then consider what you need as opposed to what you want. If you don’t actually need an item, and your old item works perfectly well, then don’t buy something new. Instead, put the money into your high interest savings account.
These can reduce your borrowing power when you apply for a home loan and they can encourage you to spend more. To reduce spontaneous buying, reduce your credit limits or put your card away in a drawer so you’re not tempted to use it. This will help you to curb any wild spending habits that you may have.
Are you looking for a home loan? YES, then contact eChoice and we’ll help you find the right home loan for YOU today.