Saving for your first home is no walk in the part, but there are some tried and tested ways to help you realise your home ownership dream sooner.
If your heart is set on buying your first home, you will need to set mind on saving for a deposit first.
If you think you can get 100% financing, then you are not ready to buy a house. Typically, you will need at least 10% deposit towards your first home. As the normal financing margin is 90%.
100% financing, it’s almost a myth, it is tough to get. The approval rate is extremely low for My First Home Scheme Program ( Skim Rumah Pertama).
Moreover, you may require to show evidence of a good financial history, with “genuine savings” often part of the lending criteria.
In addition to complying with lenders’ policies, having a good deposit will also save your money in the long run as you’ll be borrowing less and spending less on interest as a result.
But, exactly how can you accelerate your first home deposit? Here are some strategies to help you get your first home savings on track.
a) Follow your money
Understanding exactly where your money goes is the only way to know where and how you can save more.
Try to keep a diary for a month and record all your purchases, from your daily coffee through to major commitments such as rent.
Once you identify where you are spending you will be able to make the most effective cut backs.
b) Set a budget
Create a budget that factors in all major financial commitments, and then stick to it.
Remember to leave a buffer for incidental purchases; if your budget is too restrictive you will never stick to it. Keep it achievable.
c) Know your destination
Without a saving goal your saving plan is bound be forgotten, or alternatively, you will simply give up.
Sit down and determine exactly what size deposit you need to save.
The best way to do this is after you have assessed your borrowing capacity with your consultant.
d) Make a change
Saving takes determination and it will only work if you are completely committed to the end goal.
Leave any of your bad spending habits behind, especially credit card debt, and be firm with friends who might try to steer you off course.
Keep your new home firmly at the front of your mind.
e) Automated Saving
The most effective way to stick to a saving plan is to set up an automatic savings account from your monthly salary.
Many people have tried to do a standing instruction towards their ASB, Tabung haji or even other saving account.
And do your best to never withdraw any of your cash back out!
f) Assessment on your plan
Don’t set up a saving plan only to never actually evaluate how you are tracking.
Make a note in your diary to assess your progress every three months. That way, if you find your saving plan too easy, too hard or too slow, you will be able to adjust it accordingly.
Top Deposit – Saving TIPS
- Rent Cheaper – Whether it’s with your parents or friends, look at how you can reduce your rent obligation normally one of the biggest expenses to slow your deposit down.
- Cancel the credit – Steer clear of credit cards and any other high interest loans. Accumulating debt will only work against your savings efforts.
- Pack your snack – Purchasing food from cafes or take away venues is a major expenses. Meaning eating out is EXPENSIVE! Be prepared and pack your food the night before if you are heading out and about.
- Stay in – Nights on the town and dining out can really chew into your finances. Try to stick to treating yourself to one night out dinner a fortnight for instance.
Express Ways To Get Your Deposit Ready
a) Employee Provident Account ( EPF)
For the first time house buyer you can withdraw EPF account 2 as deposit.
The withdrawal amount will be determined by how much loan you take.
If you took 90% loan, your entitlement to withdraw will be 20% of the purchase price or account 2 balances whichever is lower.
b) Borrow From Family Members
If your family member has it, you can borrow from them to help in your purchase.
This will be cost saving and more flexible ways.
In return of good faith, you shall propose an instalment plan to them and how you going to pay back.
c) Personal Loan
Taking a personal loan will never be ideal step, but if you really like the house and need to have it, you can consider this too.
However, you must aware, you will end up to paid 2 loans. One is housing loan and another is Personal loan.
Enjoy this article? You may wish to read about the How To Buy Your First Home?
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