If you’re tired of renting and paying for someone else’s bond, you’re ready to take the leap and buy your very own home. Buying a home is typically the single largest purchase you will make in your lifetime, and before you start imagining how you’re going to decorate your lounge, you need to understand fully what you can afford, what your overall purchase it going to cost and how you need to prepare for your purchase.
A down payment, which is typically 20% of the home’s cost, is a payment you will make at the closing. It is good to know that in order to make it worth the closing costs and transaction fees – as a rule of thumb – you would have to own your property in Dubai for at least five to seven years. Of course this period is dependent on where you live and other incurring costs.
Saving for a down payment is an important step to take before you have chosen the home of your dreams and, although it seems like a hurdle too large to jump, it is possible to save a large sum of money by taking the following steps:
Calculate What You Can Afford
Before starting your search for your perfect home, it is important to review your other financial commitments and your lifestyle in order to know what you can afford – what you can afford is based on your monthly income and what you have in savings – and what you want from a home. You can do this by making a list of all of your basic needs (for example: locations, size, garden, etc.) Calculate what your monthly mortgage payments will be, and add taxes, utilities, maintenance, and other bills to that figure in order to have a clearer picture of the total amount you will be spending each month. By doing so you will be able to calculate a figure that suits your budget and see what sort of price range you should be looking at. You can also invest in an agent you trust who can help you through the process of finding housing options to suit your needs and your pocket.
Keep your Change
Change jars are one of the easiest ways to get started on your down payment, and although it’s not the fasted pay to save for a down payment, every penny counts and it will add up over time. Change jars also give you a visual representation of the progress you are making along your journey to saving for your new home. If you would rather have a digital change jar, round any payments you make online up, then transfer the extra money left over to you savings account instead.
Use Alternative Services
Using alternative services is all about prioritizing what is most important to you. Almost everything that you can subscribe to and pay for have a cheaper substitute available, for example cancel your cable and invest in Netflix instead. It is just a perfectly good service that still allows you to watch your favourite shows just at a fraction of the cost. Another example would be to cancel your magazine or newspaper subscription; instead you can keep up with the latest trends and news online or through social media platforms. Again, there are not major changes, but over time they will make a different to your down payment.
Follow a Strict Budget
It’s simple and easy to start a budget. By using a spread sheet, for example, you will be able to enter your gross income and all of your outgoing expenses – such as rent, groceries, utilities, car payments, etc. – and subtract them from your net income. It’s a good idea to keep all of your receipts in order to keep better track of each purchase you make. The money that is left over every month, which you might spend on luxuries like eating out and going to the cinema, can then be put into your savings account each month where it will grow and gain interest, helping you get one step closer to the amount you need for your down payment.
By following the above steps, you will be able to reach your down payment goal enabling you to invest in the home of your dreams.