Following on from my last post, I want to share a few pointers to get on the property ladder.
But first- consider if you really want to buy a property. The minimum fixed term is 2 years meaning it will be very expensive to try to sell in your fixed term if your circumstances change or you want to move. The drive to travel and to move to faraway places is especially prevalent in our age group and we will only be a 20 something once. So if you think you might want that, don't rush into buying because everyone else is doing it. Plenty of time later to play house.
Now if you think you won't want to move and you would like to buy a house, how do you go about doing this. I will write down tips I found useful and I hope you do too.
1) Create a budget. Write down your income and subtract all your outgoings. An example is copied below.
But first- consider if you really want to buy a property. The minimum fixed term is 2 years meaning it will be very expensive to try to sell in your fixed term if your circumstances change or you want to move. The drive to travel and to move to faraway places is especially prevalent in our age group and we will only be a 20 something once. So if you think you might want that, don't rush into buying because everyone else is doing it. Plenty of time later to play house.
Now if you think you won't want to move and you would like to buy a house, how do you go about doing this. I will write down tips I found useful and I hope you do too.
1) Create a budget. Write down your income and subtract all your outgoings. An example is copied below.
| Income | £1,500.00 |
| Outgoings | |
| Rent | £600.00 |
| Phone & internet | £50.00 |
| Gas, electricity & water | £75.00 |
| Commuting costs | £150.00 |
| Council tax | £75.00 |
| Groceries | £160.00 |
| Insurances | £20.00 |
| Holiday/ gift fund | £50.00 |
| Miscellanous/ eating out/ socialising | £100.00 |
| Total | £1,280.00 |
| Leftover savings | £220.00 |
2) Take stock of all your savings. If you're starting from scratch do not get worried. Once your budget is created, look at how much is against your leftover savings row (in this case it's £220). If saving this amount per month will get you a deposit by your target timeline (say 3 years) then nothing more for you to do.
3) For most people, it likely won't be that simple. So initially having a look at non-mandatory spending and seeing if that can be reduced is a good place to start. In the example above (must be a very frugal millennial), only £100 is spent on non-mandatory spending so this is unlikely to make a big difference. If this value is bigger for you look at making simple changes: making your own coffee, inviting friends for dinner instead of going out and making your own lunch all really add up.
4) If these small lifestyle changes do not help you save enough to reach your target, more fundamental changes will need to be made.
- Rent is often our biggest outgoing. If you aren't doing so already, could you save more by getting a housemate? Or are you paying a premium for living in a happening area and could you save hundreds by moving to a cheaper and boring suburb?
- Are you paying too much on your utilities? It really pays to not go with the default provider. I was recently shocked when a relative told me they were paying £80 per month for their broadband. I pay £20- this is an automatic saving of £60 per month. Make sure to shop around.
Comparison tools are a great resource for this.
5) After making all of these changes if you still don't make enough to save for a deposit and it is very important to you to get on the property ladder it might have to go to a career or location change.
I will expand on all of these items in future posts. I hope it helps.
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