This blog is another of my attempts to explode the myth that getting on the property ladder is so difficult for most people, it is more often than not a hopeless task.
Yes, it is quite a hurdle; yes it is becoming more difficult with every passing day…but impossible? Definitely not.
The secret to becoming a homeowner is:
- Firstly, belief and
- Secondly, systematic application – supported by commitment, determination and perseverance.
It is a challenge to get on the property ladder; most good things in life are.
1. Many ways to raise a deposit
Too many people in the property sector spread needless negativity about the challenge of getting a deposit together.
For some people, especially those on a low income with no access to capital assets, it is an enormous challenge.
However, it is something that can be done – and tens of thousands of people do it every year.
In the blog cut spending – grow deposit I identified five major ways for first time buyers to put together a house deposit or down payment.
Here is the list again:
- Using the Bank of Mum & Dad
- Raising money from a property
- Cutting down spending
- Boosting income
- Grabbing anything the government is offering.
Today I am going to take a bit of a deep dive into number four on the list: “boosting income”.
2. The double benefit of boosting your income
The first thing to know about growing your income is that it has a double benefit:
- Firstly it gives you more disposable income and so enables you to save more towards your house deposit, reaching your target faster
- Secondly your higher earnings will enable you to secure a bigger mortgage when you make your application, possibly reducing the deposit needed.
3. Work out how much you need
Before looking at ways to boost your income, work out:
- What you will need by way of deposit (usually 10% of the price)
- What level of earnings you will need to borrow the balance of purchase price from a bank or building society.
For example, if your proposed lender will allow you to borrow up to 3 times your annual salary and you need to borrow £120,000, you will need to earn £40,000 year.
Before deciding which lender or loan to go for, it is best practice to seek advice from an independent mortgage broker who may be able to access the whole of the mortgage market and provide you with the best deal.
Remember to ask about and factor in the fact that some lenders will not count all sources of subsidiary income when deciding how much you can afford to borrow.
There are a few timeless principles about boosting your income which are good to know:
- It is pointless boosting your income if you then go on to increase your spending
- Focus first on higher wages/income rather than more hours/work
- Two people growing their income is better than one.
4. Address mindset issues
It is easy to get stuck in a negative mindset.
Let’s say every month you just get by paying your rent and other bills. You have zero in savings and you have bills coming out of your ears.
At first glance you may seem a basket case. But of course appearances can be deceptive.
There is no natural law which says you have to just get by every month.
If you don’t have enough money to meet your needs or goals, the obvious solution is to take definite and serious steps to increase your income.
No fear. And with confidence.
FIRST TIME BUYER BASICS
Raising a deposit (14 common ways to bag a deposit with ease)
Is getting a mortgage easy? (reveals the secrets of getting a mortgage)
My first property (basic stuff all first time buyers must know)
5. Climb the wage/profit ladder
You are going to be more efficient in your income growing efforts if you focus on growing your level of income rather than doing more work.
You may have to do that in addition or in the end, but first of all focus on earning more for the same quantity of work.
If you’re on a modest salary and that is the source of your problems, don’t just rush out to find another low paid job. Focus first on moving up the income food chain.
Think about ways you can command a higher wage in the employment market place.
Ask yourself, can you:
- Gain a qualification?
- Add to your qualifications?
- Secure training?
- Gain a new skill or expertise which is in strong demand?
- Move to a better paying employer?
- Move to a better paying part of the country?
If you are self-employed, can you reduce your overheads or put up your prices to boost your profit?
6. Work related ways to add income
Explore the different ways in which you can grow your income by addressing your current job and other possible jobs. Consider the following:
- Pay rise
- Second job
- Casual work
FIRST TIME BUYER BASICS
Say no to being a tenant forever (how you can escape the tenant trap)
Buying a property fast (wacky and wicked ways to raise a deposit)
Property buyer newbie (explains the basic steps when buying)
7. Rental income
An excellent source of income often ignored by many people is the chance to get in a lodger.
If you’re a tenant, you may need your landlord’s permission to take in a lodger.
A lodger can easily increase your income by several thousand pounds a year at no great cost.
As at the time of writing (September 2018), rent from a lodger up to £7,500 per year is free of income tax.
8. Set up a business
Another way to grow your income is to look at setting up a small home business on the side, perhaps relying on the amazing new opportunities opened up by the internet and new technology.
There is a definite trend in people setting up home internet businesses – especially people with a good understanding of social media and its potential to put pound notes in pockets.
You can use any trade, qualification, knowledge, skill or training you have to start and grow an online business – taking advantage of the lower start up costs and risks which the internet offers.
9. Protect your income
Once you start to bring in extra income for your deposit or down payment, there are two things you need to remember:
1 – You must not spend it, and
2 – You must increase it the best you can – by saving it in an account which gives you the best available rate of interest.
Are there any other ways you can think of to increase your income and raise a deposit? Please leave your comments below.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com