If you have been thinking about jumping into the housing market and buying a house. You have also been wondering how you can save up for a downpayment as quickly as you can. Regarding this, it does take a little bit of planning, discipline and more time than you expected.
Begin with a plan
First thing first is you need to create a plan. Let’s assume you’d like to purchase a home with a sales price of RM450,000. Your required down payment should be 10% of the house price. If you are getting a loan, your approved loan will be based on your profile. If your profile is good, you may get up to 90% loan for your first house. But to be safe, it is better to not expect that you will get unless you are very confident with it.
You need to decide on how much you can be saving for your down payment. Let’s say you would like to save RM50,000 IN 2 years. It may take some time especially if you are just starting to save. You will need to save approximately RM2,100 each month to achieve your goal. Logically, how can you save that amount every month right? To help you out on how to save for your down payment, here is 5 simple step so you can get on the path to homeownership
Remember that the more downpayment you put, the lower your monthly payment for the house.
Step 1: Eliminate high-interest credit card debt
To eliminate high-interest credit card debt and save for a downpayment, organize your credit cards from highest interest rate to lowest and work to pay them off in that order. This can be a great way to eliminate your debt as long as there are no annual fees or balance transfer fees associated with the card, and only if you can get the debt paid off within the promotional period.
Paying down high-interest debt will also help you in attaining a lower interest rate on your home loan when you’re ready to apply and start the homebuying process.
Step 2: Tighten up your spending
This is where you take a good, hard look at your monthly budget. What are you currently paying for that you can actually get rid of temporarily or maybe permanently.
- Look at your grocery bills if you have been buying things that will just end up spoilt and not used. Only buy things that you really need and then you can chip in extra money from your grocery budget into your down payment savings.
- Eliminating high-priced meals. Start cooking so you can save those money rather than spending it on high-priced meals, you can also get to practice a healthier lifestyle.
- Reduce eating out and take out. Once or twice a month is not a problem, but if you are the type to order delivery food everyday. You need to change that! You are wasting a lot of money. Save those for your down payment.
- Look at reducing/downgrading your cell phone plan.
- Lose all the unnecessary subscriptions that you have like netflix or any unimportant apps.
Step 3: Get a side hustle
Going to your permanent job is already tiring but by doing a second job or side hustle definitely a great way to turbocharge your savings. Think about options that will complement both your current job and that are more to your sense of passion.
For suggestion, if you are creative maybe you can do small business. You can start selling your creation or anything that is in demand by the customer that will bring you profit. If you are not into doing business. You can also find a part time job so that you will get a fixed amount of money every month.
This way you can earn extra money to hit your downpayment goals
Step 4: Track every cent that you spend
Have you ever thought about trading your car for a newer model. Now STOP! That might ruin all your plans on savings for down payment. Instead you can put that money into your down payment savings so that you can reach your goals faster.
Tighten up your clothing allowance. This may not be the time to get that new handbag or worry about the latest fashion trends. Put that money you were about to spend on clothing aside to save for a downpayment.
Step 5: Consider (temporarily) redirecting your retirement savings
Another way for down payment savings is to redirect a portion of your monthly retirement savings towards your down payment. Your retirement savings are an investment in your future, it is the same as owning a house. It could be a great way to help you reach your down payment goal even faster. Just make sure after you reach your down payment goal, you will start putting money back towards your retirement.
There are many ways you can save for down payment to buy a home. The trick is to have a plan in place and find ways to save money that will work for you. It will take time and determination but at the end you will feel a little bit relaxed as all your effort that went into accumulating your down payment has been worth it.