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Mortgages

How can I save Enough for a Mortgage Deposit?

When we want to buy a home most of us will be looking for a mortgage. This will allow us to borrow the money that we need in order to own the house. However, most mortgages require a deposit. The deposit is normally a percentage of the cost of the house. The lender will want this not only to protect them against house price falls in the event of the repossessing and having to resell, so they know there are more likely to get all of their money back but to show that you are capable of saving money. There is also a big advantage to the borrowers as well, in that they will not have to borrow so much and therefore the loan will not be so expensive. However, having to save up so much money can be a real challenge and can even put some people off buying a property. There are many people that manage to do it though and so it could be possible for anyone. You may have to change your spending habits though.

– Save first – what this means is that when you get paid, put some money into a savings account first. This locks the money away and will mean that you are less likely to spend it as you will not see it in your current account. You will obviously need to carefully calculate how much money this might be, as you will need to leave enough to cover your bills for the month. It can therefore be worth looking through bank statements and seeing what you normally spend and therefore how much you can afford. It can also be wise to put any money left at the end of the month into the account as well. However, it can be tempting to wait until the end of the month before putting anything in your current account. This can mean that you will end up saving more as during the month you will check the current account to see how much money you have and if there is money there you will be more likely to spend it and less likely to budget.

– Compare all prices – when you are buying anything then it is wise to compare prices. IT is not always wise to buy the cheapest things as they may not give you value for money. However, many of us shop without noticing how much things cost and this is not wise if you want to save up a lump sum. Also, if you have long term agreements be it with existing lenders or even through guarantors, such as contracts for phones and broadband or deals with utility suppliers then make sure that you are not paying more than necessary. It can be wise to compare prices and swap, unless you are in a contract and then wait until it ends. This can help you to save money easily without really noticing any difference in the service that you are getting.

– Reduce spending on luxuries – these days we all spend a lot of money on luxury items. This is anything that does not just do the basics and so we have phones, tv’s, alcohol, go out, have holidays and all sorts of things which we could go without. Obviously, these things do add value to our lives, but if we are saving up for something then we may need to consider whether we can go without some or all of them in order to help us to save more. It is worth remembering that we will only go without them for a short time while we are saving hard. Although we may also have to make sacrifices in order to cover the cost of the mortgage repayments plus any maintenance on the house.

– Work more hours – it might be possible that you could work some more hours and earn more money that you will be able to put towards the deposit. This will obviously depend on the type of work that you do and what other commitments you have. It may be that you will have to take on an extra job in order to earn more, which could be possible for some people.

– Sell things you do not need – it is wise to have a clear out every so often anyway so that we do not get surrounded with clutter that we do not need. If you are doing this then you could try to sell some of the items and put the money towards your deposit. You may be able to sell locally or online.

– Downsize – it might be wise to think about whether where you are currently living is too expensive. If you move to a smaller rental property then you will pay less not only in rent, but also to keep it warm and possibly in council tax. This could help you to save extra money. Some people even consider moving back in with their parents so that they can avoid paying rent altogether.

Credit Cards

Should I have More than one Credit Card?

Many of us will have accredit card and some of us may have more than one. Although having credit cards can have advantages there are also risks. It is worth understanding these and then you can make up your mind whether a credit card is right for you and whether you should consider having more than one.

Advantages of a credit card

A credit card is a very convenient way to spend money. Not only is it accepted in most shops but it delays the payment on the items which means that you get some interest free credit. The cards are a secure way to pay for things as you get some insurance cover if things are not as described or do not turn up if you buy them online. They also have fraud cover so if the card gets stolen you should be able to get back any money that was stolen and the card will quickly be cancelled and you will be reissued with another.

The interest free credit can be really advantageous financially. If you buy items through the month on the card, you can keep your money in a savings account and earn interest on it until the card needs to be repaid. This will mean that you will actually profit from the card, as long as you always repay it in full and there are no card charges of any sort. You can even get cards that will give you cashback or rewards and so you get given things in exchange for spending money. This can mean that you will benefit even more but if you do not repay the whole balance you will end up paying out more than the reward is worth. So be very wary of this if you do go for a card of this sort. Also make sure that you do not spend more than necessary because you are hoping to earn more rewards. The value of the reward will never be worth more than what you have spent out.

Risks of a credit card

There are risks with using a credit card. If you use it online then your details could be intercepted and money stolen form you. However, the risk is better than with a debit card and so it is probably wiser to use a credit card rather than a debit card for online transactions. However, you can protect yourself further by using a third-party account such as Paypal.

The main risks of really with getting into debt. If you spend more on your credit card than you can afford to pay back then you will have an outstanding balance. This is within the terms of the card but it means that you will have to pay interest. When you are spending using a card it is hard to keep track of how much you are spending. This means that it can be easy to spend more than you can afford. It is possible to check your card balance as you will be able to do online banking and do this. This is a wise thing to do so that you know how much your bill will be and can make sure that you keep enough money by to pay it and stop spending when you think that it will be too expensive.

Obviously, some people are better at doing this than others. Some like to treat themselves and often spend more than they can really afford. Others would rather have money behind them in savings and so will keep a constant check on their spending to make sure that it does not go to high. Obviously, you will also need to know how much you can afford to spend as well, which means that you need to be aware of how much money you have coming in and how much you need to cover your bills.

Needing more than one credit card is not usually necessary unless you have a very low credit limit on a card and would like to be able to have more money available to you. You might want this if you buy a lot of things online and need the security of a card or want to spend more money than is available. It is so important that you do your best to repay the outstanding balance each month and as you need to be careful that with two cards you do not spend more than you can afford.

Are they right for me?

It is a very personal decision as to whether you should have one credit card or in fact two credit cards. You need to ask yourself what you will use it for and whether it will be in your financial advantage. Will it cost you too much money or will it help you? You need to be really honest with yourself about this and weight up the advantages and risks.