December 15, 2022, 08:32 – Public News Service – OSN
Buying a property remains one of the main goals of every family. Everyone wants to have their own living space, live separately, provide an apartment for their children or invest in order to rent out an extra apartment later. Moreover, experts predict further falling property prices next year. But sometimes there is no money even for a down payment, which often amounts to 10% or more of the cost of housing. How to save up for it public news service said the investor and business psychologist, founder of the largest shared real estate agency in the CIS Xenia Avers.
Earn or save?
If there is no money for a down payment, you can go in several ways: earn money, save money, or use an alternative option – get a mortgage without a down payment at all.
How to earn a down payment on a mortgage?
Ideally, the best thing to do is not to cut your current budget by saving for a down payment, but to increase it by directing new cash flows towards a down payment on a mortgage. But this is difficult to do if you live on only one salary. In this case, you are completely dependent on the employer, and every penny has already been spent in advance.
Therefore, it is worth thinking about creating additional income. And the more new sources of income you organize, the more free money you accumulate. In addition, it will give you stability and financial security – even if you lose one source of income, you will stay afloat at the expense of others.
But do not look for a second, third and fifth job. Otherwise, you will only earn burnout. Part-time employment may be an option:
Provision of one-time services, part-time work on weekends.
Opening your own business without leaving your main job.
Business without investments: creation of a professional community, a blog, seminars, real estate activities.
Monetize your hobby or skills.
Investing and creating additional income.
If you still decide to save
If the option with additional income cannot be realized, it is worth trying to review your current expenses and reduce them. Thus, the saved funds should be directed to the formation of the first installment on the mortgage.
How to cut costs?
Wages (and income in general) are more manageable than our expenses. We know approximately how much money we will receive this month, but for some reason we rarely understand where they will “go” this month.
To see where the money is going, optimize your spending, and start saving, you need to analyze all your expenses and give up some of them.
Reducing costs does not mean infringing on yourself and reducing the quality of life. Very often we spend money impulsively on absolutely useless things. Therefore, first of all, you need to learn how to spend money wisely and give up spontaneous and unnecessary purchases on emotions. A few rules will help you with this:
Learn to Distinguish Needs from Wants. Needs are something that cannot be dispensed with: food, utilities, transport, medicines. Therefore, first plan the mandatory expenses for meeting needs, then set aside money for savings for a goal (in our case, a down payment). And only after that, allocate spending on leisure. They should not be 30% of the total budget. If you spend more on daily Wishlist, you will not be able to raise the amount for a global purchase.
Make lists. Think about what you really need at the moment, and what can be removed without suffering from it. Pause. Did you get ads online? Have you seen a beautiful handbag?
Don’t buy anything right away. Marinate your order in a virtual shopping cart until the next day, or ask the boutique to hold your clothes for you. With a fresh mind, you will be able to reconsider your order and perhaps stop impulsively buying an unnecessary item. Avoid repetition. Before you buy something, remember, maybe you already have something similar?
Eliminate triggers. If you constantly order something online, unsubscribe from mailing lists and dozens of Instagram pages that are trying to swindle you out of money for the nth sweatshirt.
Find alternative sources of pleasure. Sometimes shopping becomes almost the only source of joy for us. Difficulties at work, problems at home, fatigue – we go and buy ourselves some nonsense. But the joy of buying quickly passes, and the money has already been spent.
Get emotional fuel from other things, preferably intangible things – walking with children, meeting friends, meditation, etc.
Review your regular spending. Tariffs of mobile operators, Internet charges, parking, snacks at work in a cafe, taxi fares, takeaway coffee – even a small optimization of these daily expenses allows you to “free up” 10-15% of your budget.
How to raise funds?
It turns out that you also need to be able to save money. Many people have free funds, but at the same time they cannot collect the minimum amount even for a refrigerator.
There are several ways to raise money for your goal. In our case, for a down payment on a mortgage.
Maintain a 3-component budget. Spend 50% of income on current obligatory expenses, 30% on daily desires, 20% – save for a contribution. If you find it difficult to get 20% out of the budget right away, start with a smaller amount, for example, from 3-5%, and then gradually increase it up to 10% to eventually reach 20%.
Use the envelope method. This is a classic type of budgeting, in which all income is distributed into envelopes for different categories of expenses. In our case, an envelope should appear to collect on the mortgage. When the money for one of the types of expenses in the envelope runs out, it means that you can’t spend more on this category. This type of budget allows you to control yourself and not spend money on spontaneous purchases, and also not touch the “mortgage” envelope.
Create a savings account. If you have little endurance, and you spend money uncontrollably, then you should open a special bank account where you will put money for a specific time. It is impossible to withdraw money ahead of schedule, and they will remain safe for the realization of your global goal.
Set up auto-replenishment. Such accounts can be replenished automatically, for example, from a salary or from any other receipt of money on a card. This will help you constantly increase your savings and offset some inflation.
Consider risks. A savings account or bank deposit at % helps to resist inflation, but it is important to remember that bank deposits are insured only up to 1.4 million rubles. If you have more money, then it is better to distribute it among different financial institutions.
Of course, it will take time to earn or raise the required amount. But what if you want to buy a house now, but 0 money? Consider other options.
How to get a mortgage if there is no money for a down payment?
Promotional offers from developers. Now the market is at a standstill, and many developers offer options for buying even without a down payment or give the opportunity to install the down payment for a couple of years, when construction is still underway.
Take a loan secured by existing real estate (apartment, house with a plot, non-residential premises, garage, land) for any purpose.
Sale of property. You can sell some other property, for example: an old garage or a car that you do not use. This amount may be enough for a down payment on a mortgage or partial payment for the desired apartment.
Use of mother capital. Maternity capital is often used as a down payment in the absence of own funds.
consumer credit. The process of obtaining a consumer loan is faster and simpler than in the case of a mortgage. The money received can be used as a down payment. But it is necessary to adequately assess your strengths and financial capabilities. so as not to end up in a debt hole with two loans.
As we have seen, there are many options for buying real estate. All you need is a clear desire and the right algorithm of actions.
Previously specialists toldhow mortgages and real estate prices will change in 2023.