Lack of funds is the biggest hurdle to most people acquiring a property of their own. Aside from other responsibilities and contingencies, it is still quite difficult to save up to buy or invest in landed property.
However with proper planning and determination to save up to buy your own property, you can get the fund to purchase it.
This blog post talks about down payment as it relates to real estate and tips on how to save up for it.
What Is Down payment In Real Estate?
In real estate, down payment is a calculated percentage of the monetary fund to be paid by a buyer to acquire a landed property. The first down payment is referred to as ‘Earnest Money’, while the rest paid to close the property purchase is called ‘Remainder’.
Down payment can also be referred to as ‘ Initial Deposit’.
The percentage of down payment required to be paid by the buyer depends on the property seller and might incur additional fee compared to making outright payment. In most cases, down payment is not refundable but this also depends on the property selling agency policy.
Tips On Save For Down Payment
- Know The Type Of Property You Want:
First on your to do list to save for a down payment is to identify the type of property you want. This will help you determine the required fund and the saving system to utilize in achieving this.
If the property is expensive, it will definitely require a large percentage of the purchase fee as down payment. However, if the property is very affordable, then you will be required to pay less funds.
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Understand Your Financial Capacity:
Do your best to put up a savings system that fits your finances. If possible you can draw up a finance chart showing your income, regular cost, emergency cost and your balance. This way you will be able to determine the amount you can put up for saving regularly.
It is a system that will protect you from being financially handicapped and unnecessarily taking out of your savings.
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Set A Purchase Budget:
Once you have defined how much you have left of your income after fulfilling other necessary responsibilities. Put a budget system in place to determine how much is the total payment and how much you will be saving regularly.
A budget system helps you to remain disciplined and consistent about what goes into your down payment savings. This way you will be more focused on achieving your goals towards making a down payment.
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Consider Using A Fixed Deposit:
Although a lot of people might not be open to this idea, it will be a good option to consider when saving for a down payment. With a fixed deposit, you can set the period for your savings and there is no taking out of the fund until the period is up.
Also with some fixed deposit gives returns in form of interest on savings. This can be another source to ease your savings process for a down payment.
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Reduce Your Expenses:
Although you might only be spending money on essentials, if it is possible, you should reduce some of your expenses. You make a list of things that need to be prioritized and you use them regularly. This will prevent you from spending on things that are not of essential use at the time.
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Consider Using Down Payment Program Or System:
Do your due diligence to find out if the intended property selling company offers any down payment system. It could be a save up system or any other program put in place to ease the down payment process for their client.
Conclusion
There are different ways to plan and save up for down payment of the property you are interested in acquiring. However, you have to be determined about it.
Many real estate companies offer down payment on their property to ease payment for their client. You can check out realtor agencies that have properties with down payment systems.
If you are looking to purchase a home as an individual or family, check out Sterling Homes Property. We have properties in different estates with a down payment system that would align with your budget.