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Category:
News /
Personal Finance /
Home Loans
/ June 2008
How To Save To Buy A Home
“In
order be able to buy property, people need to get back to basics and
start saving for the house they want to purchase,” says Marsha Haupt,
sales director at Betterbond.
Saving may be difficult under the present market situation with
conditions such as high interest rates and fuel prices eating away
at everyone’s pocket, but saving is possible no matter how little
you may start off with.
Haupt provides helpful insight for first time homebuyers on how to
save to buy a house of their own.
Once a potential homebuyer has made up their mind that they want to
purchase a home in the near future, the very first thing they should
do is look around for a house that they might want to purchase.
In
order to be able to plan effectively to buy a house people need to
have a ‘feel’ for how much they need in order to be able to purchase
a home in that range.
To
save money is to get into the habit of taking funds and placing it
into an account where it cannot be accessed immediately.
Banks offer a variety of packages and it is a good idea to look for
a saving option that offers the best interest rates for very little
risk. Some good examples are 32 day notice and fixed accounts.
The
next step is to look at expenses that can be eliminated, such as
satellite television, new clothes, eating out and trips to the
hairdresser and nail salons.
Cutting down on cell phone usage as well as getting rid of credit
cards will also be extremely helpful.
By
downsizing current living expenses and putting aside any lump sums
of money, such as tax refunds or bonuses, will get a person that
much closer to a home of their own.
It
is essential to remember that the more a homebuyer can pay as a
deposit, the less they will end up being billed in interest over the
long term.
For
those who are in a position to do so, it makes sense to purchase a
property with a friend or spouse as banks will view the transaction
as a better risk because of the joint income.
It
is however essential to be aware of the risks, such as if the
relationship ends.
It
is wise to have a legal contract drawn up stating each party’s
obligations, how much each will pay and the split which is usually
50/50.
Potential homebuyers should take note of the following points, in
addition to the guidelines mentioned above:
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When you do shopping, write a list and stick to it.
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Cut down on outside entertainment and vacations, rather stay
home and rent a DVD or invite friends over for a ‘bring & braai’.
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Let friends and family know that you are saving to buy a home.
This way they will understand if your birthday and other gifts
aren’t as extravagant as they once were. Put the extra money you
would have spent into your ‘home’ savings account.
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Sell off things that you don’t really need or use anymore, such
as the exercise bike that has been sitting in the garage for two
years.
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Get a part time job and save the income for your home. Even if
the job is every other weekend, the extra income will help.
It
is not practical to buy a house or aim to buy a house that a person
cannot afford. A good idea is to speak to the bank and determine
what exactly is affordable and stick to it.
For
someone wanting to buy a home, purchasing that home should move to
the top of their priority list – when something is that important,
people are willing to make sacrifices.
And
once someone has a vision of the home they want, nothing and no one
will be able to stop them from saving for it.
Source: ITInews – Insurance
Times and Investments Online
www.itinews.co.za
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