When you move around between rental property to rental property, it can at times feel like you are never going to be able to get off this ladder. The idea of owning your own house can seem like an unachievable dream, but there are in fact some things that you can do to make this a reality. Here are some of the things you can do to get away from renting and become a homeowner.
The first thing you need to do is sort out your finances. This frequently means that you have to start saving for a deposit, as this will be a massive part of being able to afford a project. If you don’t yet have tight control over your finances, now is the time to step in and ensure that you are able to get them. There are many right and wrong ways to try to save your money. You need to ensure that the methods you choose are as consistent as possible so you can begin to build up that deposit.
One of the easiest ways to save is using the 50/30/20 method. This will remove part of your income each month and put it into savings while also ensuring that you are able to meet any other costs that you might have to pay, such as your rent.
The 50 of the ratio is 50% of your income. This is to go to necessities, such as rent, utilities, transport, and food. The other ratios are the amount that you put into savings and the disposable income you can use on things like the cinema or eating out. If you want to save a little faster, aim to save 30% of your income. If you want to take things at more of a measured pace, maybe 20% is a better choice.
Learn What You Can Afford
You need to make sure that you are not applying for a mortgage that is going to be too big for you to repay. Your monthly repayments should be a perfectly manageable part of your expenses. Ideally, they should also be slightly below what you pay in rent each month. It is actually easier than you might think to find a property with a mortgage repayment cost below what you have to pay when renting, which makes it a much better choice for many.
Therefore, it is important that you establish fairly early on how much you are going to be able to afford. After all, you might be able to afford a nice apartment with a few bedrooms in a nice area, buying a high-end condo in a luxury district might be a little beyond you.
One of the best options for Singapore residents can be to look into what HDBs have to offer. This HDB calculator lets you work out how much you can afford. HDBs are fantastic options, and tools like this calculator can help you to feasibly determine whether or not you would be able to afford one.
Sort Out Your Credit Score
Though you might have a deposit ready to go and an idea about the type of property that you want to buy, you might still struggle to find a lender who will give you a mortgage. This could be for one very simple fact – you have a low credit score. It can be very difficult to operate with a low credit score and one of the main places where it can prove to be a real barrier is in getting approved for loans like mortgages.
This is because a low credit score is an indicator that you might not be the most trustworthy when it comes to paying back your loan. The lenders want to get their money back, and so they are more inclined to give to trustworthy borrowers who have higher credit scores.
There are several things that you can do to improve your credit score. The first thing that you need to do is ensure that you improve the way in which you handle your finances. Make sure that your bills are paid, and think about consolidating your debts. You could also look into credit monitoring services to help you find out where improvements need to be made.
Are you ready to stop renting and get on the housing ladder? There is going to be a lot of organization to do to ensure that you are in the best possible position for renting. However, with the right attitude and a commitment to saving and improving your finances, you might be ready to buy faster than you think. Find out what it will take for you to be able to buy your first property now, and start saving for that mortgage deposit!