Financially savvy ways to buy a house 

Buying a house can be a stressful process.

Between saving up for a deposit and securing a mortgage, there are many things that could go wrong. However, getting on the property ladder doesn’t have to feel impossible. In fact, there are a few savvy ways for you to work towards buying a house, some tips lesser-known than others. 

Saving Smart
Saving for a deposit, even just 5%, can be a tough task. The process takes a lot of persistence and patience. However, one of the most effective ways to save is to cut down on unnecessary monthly expenses. 

Many people choose to stay with their current home insurance and utilities provider for the sake of convenience, however, looking around might allow you to find cheaper deals that will help you cut down on monthly spendings.

To make further savings means saying ‘no’ to all those luxuries that you may not have previously had to think twice about. Research conducted by Deliveroo showed that the average Brit spends around £80 on takeaways each month, while this average increases to £100 for people who live in London and Edinburgh. This equates to a whopping £1,000 on takeaways per year.  

It isn’t just takeaways that can impact how quickly you save, but also holidays. According to Evolution Money, you would need to fork out £4,792 for a family of four to go on a two-week holiday, and this doesn’t even include the spending while you are there. 

Although it means that you will have to be more conscious with your spending, this change in habit will allow you to save more diligently and put aside thousands of pounds for a house in just a few years.

Deposit-free mortgage
Most people are under the assumption that you can only buy a house if you have a deposit, however, contrary to the common belief, there are schemes in place that would allow a deposit-free house. 

The government offers a Rent-to-Buy scheme (also known as Try-Before-You-Buy or Rent-to-Own), which allows you to transition from renting to buying a home after a period of time with subsidised rent. The scheme gives you up to 5 years to rent and save at the same time, with the goal of buying the property at the end of it. If you choose not to purchase the property, however, or are financially unable to after the given amount of time, then you must move out of the rented accommodation. In order to qualify for the scheme, you are required to earn under £60,000 and have a good credit score.

Another way to purchase a house without saving up for a deposit yourself is by relying on your family’s help. If you are a first-time buyer, a scheme from Halifax allows you to opt for the ‘Family Boost Mortgage’. This mortgage allows up to two family members to help you put down a 10% deposit into a three-year fixed-term savings account. Once this has been processed, the mortgage will be taken out under your name and will initially be a repayment mortgage. Every month your payments reduce the amount you owe as well as paying off any interest charges, allowing your family to be paid back the total amount as well as earning interest by the end of the three years and for you to be a homeowner. 

Mortgage-free house
If you already have a home with a mortgage, you may not need to go through the process of borrowing any more money. This is especially the case for those looking to downsize. Buying a smaller house often means that it will cost significantly less than your current home and can rely on the mortgage that you have already paid. The equity could, therefore, be used to pay for a smaller house in full. 

Alternatively, you can get a mortgage-free house by paying for the asking price in full. This method provides a few benefits, as getting a mortgage is often a complicated process, paying in full allows fewer hiccups when purchasing a house. Without the various middlemen needed to get a loan, this lowers the chances of the transaction falling through and the sale will likely go through much quicker. Paying in full would also make you more desirable in comparison to a house buyer who requires a mortgage, should you both be interested in the same property.

While for many people it can take years, even decades, to even begin the process of buying a house, these alternative ways may allow you to look towards purchasing a property without being held back by the gruelling requirements of getting a deposit and securing a mortgage.