As an adult, owning a home probably features somewhere at the top of your wish list. However, if you currently reside in a rented apartment, chances are that the thought of getting your ducks in a row to purchase a home is overwhelming.
The good news is you’re not alone, and the definitive way to be prepared to buy a home while being a tenant is to save judiciously.
Saving to buy a home while paying rent, however, is not as simple as it sounds. It requires careful planning and a sound strategy. A good plan will help you save systematically in time to buy the perfect home in the timeline you intended.
Provided below are some ideas to create a saving plan that will help you buy a home while you’re paying rent.
Do financial stocktaking
Before you begin, take a comprehensive look at your finances to determine your expenses, savings, investments, loan eligibility and so on. This will also give you a sense of how much more you need to save and within what timeframe.
Minimise expenses
When you have a good idea of what your financial state is, you can then move on to identifying areas where your expenses can be minimised. A little research should help you find more cost effective replacements for the most expensive items in your budget.
Trim all the excess frills
Apart from major expenses, you may also notice that there are some expenses that don’t bring you any actual value. Some of them include unused gym memberships, credit cards with high charges, unused club memberships and so on. You could consider nixing these additional frills to boost your savings.
Automate savings
Set up your account so that a certain percentage or a specific amount of your monthly income is saved automatically. This will greatly reduce the chances of the amount being spent on other avenues of expenses.
Use unexpected increases in income
If you’re a salaried individual, you will enjoy periodic boosts in income in the form of raises, bonuses, tax refunds and so on. You may also be the recipient of lump sum amounts of money as gifts or inheritance from family. Earmarking all these boosts in income as savings towards your home purchase will help you put together a good amount for down payment, registration charges and so on.
Consider additional streams of income
Additional streams of income (with the approval of your current employer) could be another way to fund the purchase of a home faster. Taking on a secondary job or freelance assignments or investing in the stock market are all ways to supplement your regular income.
Maintain a good credit score
Home loans are essential for buying property. In order to get good deals on home loans when you’re ready to buy, you must have a good credit score. You can start working on improving your credit score right away by paying off existing debts such as student loans, credit card debts or automobile loans on time. Cautious use of credit cards is also advised.
With a little bit of foresight and planning, saving up to buy a home can be effortless. This way there’s no additional strain on your finances while you reside in a rented home.
This article was originally published on www.thehindu.com
