SAVINGS
We all know that we need to save for a deposit if we want to get a foot on the ladder, but it’s a lot easier said than done! Debbie Clark summarises some small changes which can accelerate your saving journey. As the old saying goes, if you look after the pennies then the pounds will look after themselves! SPEED UP YOUR SAVING EXPERT COMMENT
Having a healthy credit score can be the key to unlocking a great mortgage deal. Your score shows how lenders will view your creditworthiness – which is your ability to manage credit well. So, the better your score, the more likely you are to be accepted at the best rates. Here’s my top tips for how you can improve your credit score: Check your report and score You should regularly check your free Experian credit report and score so you know where you stand. If you’re applying for a mortgage, you’ll want to check at least six to 12 months in advance. Then you can monitor your credit score to track your progress and make sure you’re ready to apply. Pay your bills on time Just one missed payment can have a big impact on your credit score, so you’ll want to make sure you keep all your payments up to date. Setting up direct debits will help to avoid any mistakes. Reduce credit card balances Having credit card balances that are close to your credit limit can have a negative impact your score. So, think about paying balances down before you apply. A good rule of thumb is keeping your balances below around 25% of the credit limit. If you’re on a promotional rate this rule might not apply in the same way. Get on the Electoral Register Being on the Electoral Register not only improves your Experian credit score, but it also helps lenders identify you when you apply. Just make sure to re-register as soon as you move into your new home. Don’t apply for lots of new accounts Applying for lots of accounts in a short space of time can reduce your credit score. So, try not to take out any new credit for a few months before you apply for a mortgage.
Let’s start with the boring stuff. It’s not possible to know where you can make savings unless you know where your money is going. Start by taking a thorough look at your online banking; most banks have tools to help you analyse your current spending – use them! Some spending is non-negotiable, namely your rent and bills. Do you know when this money leaves your account? If you are paid monthly, it is useful to time these for just after payday so you can clearly see what money you have available for the rest of the month. Even better if you can automate saving at the same time – make it a non-negotiable too, rather than hoping there’ll be some left at the end of the month. While some outgoings are essential, don’t assume savings are impossible. With most insurance firms, for example, you pay a premium to pay monthly. If you can afford to, pay up-front. It may feel like a big hit to your savings but will save you more in the long-run. Check your utility companies and mobile provider too to check you are getting the best prices. If you are able to make savings, automate that saving too – you’ve already been paying it so won’t feel the hit. There are likely other areas you can identify where you could make savings, however small. Many people have unused subscriptions, or long-forgotten memberships, for example.Your online banking is also a great place to check for these. Be honest with yourself about how much you are using these subscriptions, and if you would miss them. If you are keen to take a deeper dive into your spending, apps like YNAB and Mint can help you to track your finances systematically and identify any patterns. In any household, food shopping is one of the biggest expenses, so this is another great place to make small changes. Meal planning will help save money and avoid unnecessary waste, especially if combined with batch cooking, so try to always shop with a list and stick to it, opting for generic products, not brand names. Look out for
community pantries in your area too – helping the planet while you save. Saving for a new home is also the perfect time to declutter, embracing minimalism! Could you make some money selling items on Vinted or Facebook Marketplace? It might help to ask yourself if you envisage those items in your new home.When shopping, focus on only buying what you really need. If you know you’re an impulse buyer, try imposing a 30-day rule – if you’re tempted to spend, wait. If you still want it a month later, go ahead! However, don’t make any purchases without doing your research… The internet makes it very easy to compare prices fast. There are also usually discount codes to be found if you look hard enough, and always check to see if cashback is available (take a look at Topcashback, Quidco and other major cashback sites). Check too for any loyalty rewards or offers from your bank or credit card. Planning for your future home is a great time to focus on your health too – reducing or quitting tobacco or alcohol will have fantastic benefits for both your health and finances. If you’re a gym member, consider switching it up and exercising at home, using online workouts or apps to make savings on a pricey membership. Remember, saving doesn’t have to be lonely. Chances are if you are struggling to save, friends are too. Talk to them about your goals and plan activities together like walks, movie nights and free museums. You could plan a "no spend weekend" with friends or family too, using up leftover food from the week. You could even suggest book swaps with friends, or skills swaps (“Could you help with some DIY, and I’ll do your nails?”) to allow you to enjoy some luxuries that you may otherwise be missing while saving. Finally, with the festive season on the horizon, be careful not to let all your hard work go to waste. Budget frugally for any gifts or special events and, when you’re tempted to blow that budget, keep the dream of that first Christmas in your own home firmly in the front of your mind!
John Webb, Consumer Affairs Manager, Experian
22 First Time Buyer October/November 2024
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