How to Rent AND Save for a House at the Same Time

How to Rent AND Save for a House at the Same Time


Renting and saving for a house at the same time is never easy – but it is doable. It takes careful planning, a positive commitment and a willingness to budget like crazy!


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Below we go through five steps you must take if you’re determined to buy your own home – but need to keep a roof over your head in the meantime!


Step #1: Take an Honest Look at Your Finances



Before you start checking out houses for sale or engage an estate agent, you’ll need to take a deep dive into your current financial situation. This means knowing your monthly incomings and outgoings, counting the cash you’ve already saved, and getting the lowdown on your credit score.


  • Incomings and Outgoings

To get to grips with what comes in and out of your wallet every month, start by making a list of household income and fixed monthly costs - rent, utilities, car insurance, etc. Determine what other regular costs you have such as groceries, petrol and credit card repayments.


Doing all of this will enable you to see what is left over from your paycheck once fixed and regular outgoings have been subtracted. And as a result, you’ll be in a much better position to manage your money and dream-pad savings.


  • Savings

Don’t keep any savings you have in a standard deposit account as interest rates on these accounts are pretty low. Instead, store your money in a regular or longer-term fixed-rate savings account (shop around for the best deals). This will yield you the best return on your funds and quite possibly add an extra few hundred quid to your hard-earned hoard.


  • Credit Score

Knowing your credit score will give you a heads up on whether your chances of being approved for a loan are high or low.


Your credit score is a rating from the Central Credit Registrar (or the Irish Credit Bureau up until October 2021) and is based on your credit history at a given time. As well as taking into account any current loans and credit card repayments you may have, it rounds up the info on any inactive loans that were closed within the last five years.


If you have a bad credit score, don’t despair. It does mean getting approval for a mortgage may be more difficult but not necessarily impossible. If, for example, you can stump up more than the expected 10% deposit thus reducing the loan you’re requesting, that may act in your favour.


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Step #2: Work Out the Amount to Save



The next move when renting and saving for a house at the same time is to work out the monthly amount you’ll need to squirrel away to build a deposit for your future home. Decide on the property price you think you can afford and be aware of the other costs you’ll need to consider.


These additional expenses include everything from stamp duty and solicitor payments to bank valuation fees and property insurance. If your head is already starting to spin, don’t worry – we’ve listed the property purchase costs to consider here so you don’t have to!


Once you’ve worked out a ballpark figure for these costs add them to the deposit amount you’ll need to save. As noted above, first time home buyers typically need 10% of the property price as a deposit.


Then, simply divide this total by the number of months it’ll likely take you to gather the moola together.


For example, your deposit and these extras may round off to €35,000. If you have your heart set on having the key to your new abode in three years (36 months), you’ll need to divide €35,000 by 36 to find out how much you must put aside each month.


Step #3: Start A Monthly Savings Plan



Once you have your sums sorted and you know the monthly amount you need to save to secure a crib of your own, it’s time to put a savings plan in place. This will help you to keep your commitment to your house fund on track.


The most successful monthly savings plans include three straightforward steps - cut spending, reduce debt and organise bill payments into direct debits.


  • Cut Spending

You may think you can’t survive without your daily double chocolate mocha latte, but, in fact, you can - and a few other things besides! Gym membership you’re only pretending to use? Yeah, that has to go, as do any other lapsed or irrelevant subscriptions.


The easiest way to cut back on expenses is by listing your spending habits into two separate categories of “needs” and “wants”. Go back to the fixed and regular outgoings you determined in step #2, as these would be “needs” and may offer opportunities for savings. For example, can you switch internet or mobile phone provider? Are there savings to be made on your grocery bill? You may think doing this won’t result in much-returned cashola, but even a savings of €20 a week will add an annual €960 to your house fund!


It’s also important to try and whittle down the “wants” category. While that might mean cutting back on social engagements or certain little luxuries you’ve gotten used to, if it moves you closer to your dream pad it’ll be worth it in the end.


Of course, don’t cut out all the fun stuff. If you find that the only way you can afford to save for a house is by living off plain pasta and blacklisting your friends, then it might mean this is the wrong time for you to plan to buy a home.


Equally, there may be other measures you can take. If you need to grow your monthly income - can you talk to your boss about a rise or is this an opportunity for you to move into a better paying job?


Another option is to reevaluate the properties you can afford and check out whether there are cheaper homes on the market that would suit you.


  • Organise Direct Debits

Your future mortgage provider will want to be confident you can pay back your loan. So, proving you can settle up your bills on time is critical. Using automatic payment systems for rent, bills and any other essential expenses will not only ensure everything gets paid on time but will also polish up your credit score.


Organise all direct debits a day or so after your salary is deposited into your account to make sure you have the bucks in the bank for your outgoings.


  • Reduce Debt

Again, reducing debt is super-important for sprucing up your credit score. No bank is going to lend you a large wad of cash if they can see you still owe thousands on your credit cards.


So work out how much you can afford to repay monthly to reduce any debts sooner rather than later – and – a bit of a no-brainer here – step away from your credit cards, like, yesterday!


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Step #4: Consider Your Living Arrangements



If you’ve done all of the above and you’re still low on the necessary funds you’ll need to save to buy a home of your own, you may need to change your current living arrangements.


One way to recoup some readies is to downsize your rented accommodation. If you’re living on your own you could consider looking for a room in a shared house or moving into a studio apartment if that’s smaller and cheaper than your current abode.


If you have an extra room, you could also – with your landlord’s permission - rent that out.


And, of course, if it’s a possibility, there is always the option of moving back in with your parents while you save to move out for good!


Step #5: Keep the Dream Alive!



The final step is to remain confident that you can maintain your savings commitment and keep on keeping on! That can be harder said than done but there are some actions you can take to set your goal front and centre.  


  • Stick to the (Written) Plan

Take the time to write out your monthly savings plan and set aside a few minutes per week to look over it. Consistently checking the plan will help you not to stray from it and may allow you to elbow out any other expenses as you become more familiar with the various ways you spend money.


  • Visual Reminders

It may sound a bit “woo-woo”, but creating a vision board of your would-be-pad and placing it somewhere visible can serve as a daily reminder of your home-ownership aspirations. Vision boards can be pretty powerful as they keep goals top of mind, making it easier for you to focus on and therefore reach your objective.


  • Visualisation Techniques

If going full-throttle vision-boarding is a step too far for you, even setting aside some time to visualise what owning your own home will be like can help. Visualisation is the practice of repeatedly imagining what you want to accomplish so that it becomes achievable and almost real to you. Many elite athletes and business owners are very open about using visualisation techniques to help them succeed. And heck, if visualising accomplishing a goal is good enough for 23-time gold medallist swimmer, Michael Phelps, it really should be good enough for you!


  • Remember Your ‘Why’

The last tip is to remember why you’re doing this in the first place. As you bow out of yet another fun but expensive social event or struggle on with your “so-last-year” mobile phone instead of a spanking new model, it’s important to find opportunities to remind yourself what these sacrifices are all for.


Why do you want to buy a home and what freedom, financial equity and money will you be saving in the long term? Spell it out. Write it down or journal about it. Even talk aloud to yourself! 


Highlight all the benefits homeownership brings from not having to worry about rising rents to being a pretty solid investment, even down to ensuring that, all going well, you won’t have to bother with home repayments in retirement. 


Remembering your “why” will help you to stay committed to spending less and saving more while you continue renting and moving steadily towards your dream home.