08 Mar 2017
So you’re all set and ready to buy your first home – and first on the list is getting mortgage approval. This all comes down to some key factors: security and consistency of income, and your outgoings and savings.
Don’t panic – it’s not as tough as it sounds, and you don’t need to do a full 180 and revamp your lifestyle. But you may need to ask yourself if you have any bad habits that will get in the way.
To help you out, we’ve outlined seven of these habits – and if you’re guilty of any of them, it could be time to get tough so you’ll be one step closer to buying your home.
1. Stop impulse buying
Put away your bank card and step away from those shoes!
We’re all guilty of it. But impulse buying isn’t just about picking up a new piece of clothing that you don’t actually need – it’s also buying smaller, ‘essential’ items that all add up (for example, during your weekly grocery shop). This is the single worst habit that will keep you from reaching your deposit, and it’s usually the hardest to break. But it can be done! Just follow these small steps:
2. Spend smart with credit card and cash purchases
Credit and debit card purchases don’t necessarily give us the feeling that we actually spent money – which is not-so-good for our pockets. Solution?
You need to spend smart – whether that is with a credit card or in cash. Purchasing in cash can be good for your pockets – as you can get the real feel of the money you’re handing over.
If you are purchasing with a credit card, make sure you clear your credit card balance in full each month. And be aware that even if you do clear your credit card balance in full each month you may end up spending more and paying more in bank charges for using an ATM.
Avoid shopping online as much as you can. Especially if your card details are saved on services like PayPal or Amazon – which makes the purchase oh-so-simple and dangerously tempting.
Yes, you deserve some treats as you save. Don’t worry, we’re not suggesting you take them away altogether. But try to avoid the habit of “deserving” too many treats. Saving €10 doesn’t mean you can give yourself a €5 treat.
You can break free from the ‘over-treating habit’ by creating milestones in your savings plan. For example, give yourself a monthly moderate treat allowance or decide on the treat to receive at each milestone as a motivator to save.
4. Irregular saving
While all saving is great, your lender will be a bigger fan of regular saving. Potential lenders want to see that you can save a fixed amount. If you can prove additional savings on top of that at irregular intervals, it shows that you can go above and beyond.
But it’s not just the lenders that see regular savings as something great; your savings account will also agree.
Setting up a direct debit into your savings account proves you’re committed to the cause! Not even treats or impulse buys will get in the way.
If you haven’t yet, why not set up a regular savings account?
There is no need yet to turn into a coupon hoarder, but we do advise taking a critical look at your lifestyle and checking alternatives to the products you buy and the activities you do. There are great savings to be made by changing gyms, supermarkets, phone providers and more – so go on, start shopping around!
Also consider savings through taxes. Are you getting all the tax benefits you should? There are travel savers, return on medical bills, rent allowances etc. You’re probably entitled to more than you know!
Breaking your current lifestyle habits and becoming a little savvier will make a big difference to getting one step closer to buying your house.
6. Clearing Debt
Look at your existing debt with a critical eye. Would moving your debt result in savings? Or better yet, can you pay off a loan early?
Not everyone will be in a position to pay off all debt immediately. And to satisfy potential lenders, you don’t need to. Lenders want to see that you can pay off any loans while still having additional savings. That’s a big chunk of change, so if you do have to decide between one (saving) and the other (loans), try and clear the debt first.
But before you skip off to pay the loan in one lump sum, one word of caution – check if there are any fees associated with paying a loan off early. It may not be worth it.
7. Break up with the Joneses
The final habit to break is trying to keep up with the Joneses. Just because everyone in work buys the expensive take-away coffee, you don’t have to (at €3 per cup, you are already saving €15 per week extra; that’s €780 over the whole year!).
There are plenty more examples just like this - from going out for lunch every day to cocktails, clothes or just having to try that new spa/barber/nail salon/restaurant.
Psst – this doesn’t mean you have to break up with your friends and colleagues while you save. Just be a smarter spender. For example, go out for lunch with colleagues every Friday as a treat and make your own the rest of the week (you may start a trend!).
Getting a kick out of saving to buy a house
It sounds hard to save and to get your outgoings under control. But by kicking these seven habits, you’ll be surprised at how much fun you can still have, while ensuring your financial statements look well.
Saving your deposit is a massive achievement, and one to be proud of.
Reaching that goal will feel super – and just imagine how great it will feel when you finally move into your own home!
Thinking of applying for your first mortgage?
Have you kicked those habits and want to get on the property ladder with a house of your own? A 30 Minute Mortgage Meeting with an EBS mortgage advisor will set you on the right path.
If you have any queries about opening an EBS savings account, call 1850 654 321 or email email@example.com.
EBS d.a.c. is regulated by the Central Bank of Ireland.
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