7 Key Tips for Saving Money for a Down Payment On a House

The homeownership rate in 2018 was at 64.8%. To be part of this statistic, you need to play your part. Save your money and prepare to make the down payment on a house.

Are you currently renting and desire to buy a house but have no idea of how you will save up the down payment on a house required? The benefits of purchasing your own home are immense. Your family can rest easy knowing that they have a roof over their heads.

However, it may seem impossible if you are a spendthrift person who cannot seem to maintain money in your account. Also, if you have a family, the pressure of family expenditure can be overwhelming so that saving seems impossible.

Make That down Payment on a House: 7 Key Saving Tips

Saving is a culture, which you have to nurture over time. Being patient with your plans can be difficult. You can still have your normal expenditures and save up for the down payment.

Here are 7 tips guaranteed to help you save.

1. Make Buying a Home Your Priority

Here are the essential factors to help you evaluate your readiness to start saving for down payments on a house. Are you prepared to stick to one geographical location? Most people at late twenties and early thirties are not ready to commit to staying in one place yet.

If your career is still, growing, making the decision to settle down in one location can be challenging.

For you to save for something it has to be a priority. Ensure you begin saving as you narrow down on where you want to buy your home. Take the time when your career is growing, and you’re visiting several cities to decide where to buy your home.

Do your research and consult people who have achieved success in real estate like Courtney Lanier Sarofim and make plans accordingly.

2. Use Automated Savings App

Most banks and financial institutions apps have an automated savings program. It ensures an e-wallet or a debit card charge is rounded up to the next dollar, and savings are automated. The savings are channeled in a specific bank account, for instance, in this case, down payment fund.

Although a saving plan accumulates money very slowly, if you are a frequent user of your e-wallet or debit card, it can help promote your saving habit. The small savings will eventually be a decent amount of money by the end of the year. In the end, when looking forward to saving for down payments, every little effort counts.

Also, it offers a painless way of adding money to your down payment fund.

3. Keep Your Old Car

Most people look for a new car once they have paid off the loan of the current one. Some even start looking for the next vehicle before offsetting the loan on the current vehicle. Another prime down payment saving strategy you should employ is keeping your car even after you have fully paid it.

Rather than purchasing a new car, direct the money you once used for car payment into your down payment fund. It will contribute to a significant amount of money and will speed up your home down payment accumulation process.

Alternatively, you can utilize carpools and public transport to travel. If you do the calculation, you will see that you are saving much more on fuel cost and car purchase cost. If you have a partner and you both have a car, consider getting rid of one.

It will save your car maintenance costs, insurance, and gas payments, which you can channel in the down payment of a house.

4. Bonuses and Salary Increments

If you are expecting a salary raise or receive a bonus, channel this towards your home down payment. The reality is that you are already living at a budget that does not require this additional increase. Instead of increasing your budget, channel this money to your down payment on a house.

When it comes to the few things that can help you reach your long-term financial goal, the fun can wait. You can ensure to increase your automatic savings account so that the increment can automatically get to your down payment.

5. Automated Transfers

Schedule a monthly transfer of a certain percentage of your salary into the bank account you have set aside for property funding. Select an amount for automatic transfer into the down payment in a house, which will not negatively influence your daily living. Also, do not make the automatic transfer amount so small that it proves insignificant in saving for the down payment.

Of all the saving plan schemes, the money you set aside for automatic saving will prove to lead in the most significant sources of funds for the down payment.

6. Channel Tax Refunds

Setting aside tax refunds is the most solid place to start saving for a home down payment. Often people use their tax refund for leisure purposes. Since tax refund is often huge, you can use it to give your down payment a solid boost.

Use the tax-free saving account to save for your down payment on a house. Your money will grow tax-free in the account. You will not have to be deducted income tax from the money you earn as it accumulates in the account.

7. Tap into Your Retirement Account

You should consider this as your last option. Note that it is an element of shifting from the left pocket to the right pocket. It results in reduced retirement funds available.

The Employees Provident Fund (EPF) allows their clients to withdraw up to 100% with no penalty if you are to use the funds to purchase a house. Yes, you will be taking your money from the retirement funds. However, the company does not penalize you, and you will place the money in another important investment, your home.

As long as you are not close to retiring, this is a reasonable and suitable strategy to help accumulate your down payment fast.

Make Sure You Understand the Amount You Are Required to Pay as Your down Payment for a House

If you do not have enough savings, you will need to build up your saving culture. The process will prove to be beneficial even afterward, as you will become a better steward of your finances. If you use these 7 tips, you will easily make a down payment on a house when the time is right.

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