Accommodation expenses are the most significant monthly expense for most of us.
Thankfully, whether you are renting or owning your flat or house there are many ways in which you can reduce or even eliminate this significant monthly expense.
Below are the FILIP ways for reducing your accommodation expenses starting today!
If you are renting
1) Flat/house sharing – Share the flat or house you are renting.
Sharing with one or more people reduces significantly the cost of accommodation as well as the cost of the bills.
Finding a flatmate or housemate may not be very easy as you need to find someone who you need to get along with.
Start with your circle of friends and colleagues and explore if someone would be interested to share a flat or house with you.
Having a flatmate or housemate can also end up being a lot of fun.
This is not an option for everyone and may not be the best option for you if you are not willing to sacrifice the peace of mind that living on your own offers. However, it is worth considering this as it can reduce your monthly accommodation expenses.
2) Sub-let the apartment or house you are renting.
If your landlord agrees, a good option is to rent a flat or house with more than one bedrooms, live in one of the rooms and sub-let the rest of the rooms to other people.
As you will be managing the accommodation you will be able to agree the terms with all the other tenants and you can negotiate good terms in order to reduce your portion of the rent expense.
3) Live with friends or family. Eliminate accommodation expenses
If you have any friends or family members who have a spare room and they are willing to help, you can ask them if you can live with them for a short period of time for free or for a longer period of time by paying some rent and contributing towards the bills.
This option can prove relatively inexpensive but it also depends on your personal circumstances.
For example, if you have just moved to a new city or country you may not have a circle of family or friends.
If you do have some family or friends living in the same city this option can save you a large amount of money.
4) Consider buying
In certain cases it can be more cost efficient to buy rather than rent.
There are two rules you should follow before deciding whether to buy
a) the monthly cost after buying should not exceed the monthly cost of renting and
b) your monthly mortgage payment should not exceed 30% of your net monthly salary.
We go into more detail in a separate article on how you can assess whether buying or renting is the best option for you by comparing the cost of buying to the cost of renting. Please check this article for more detail.
If you own your flat or house
1) Remortgage on better terms
Do your research and identify mortgage providers who offer lower interest rates.
There are many comparison websites where you can quickly check how your current mortgage provider compares to other providers.
Check if you are paying a fixed or variable rate.
If you are paying a variable rate this is usually much more expensive and you should remortgage now to a fixed rate mortgage.
If you are on a fixed rate mortgage 3 to 4 months before your current mortgage fixed term expires identify the cheapest option (both in terms of interest rate and remortgage one-off fees). Either get a quote from that mortgage provider directly or via a mortgage broker.
Mortgage broker can be a quick easy way to get the best quotes from mortgage providers and many times they won’t charge you anything as they get their fee from the mortgage providers.
2) House hack – Rent one of your spare rooms and use this money to reduce your accommodation expenses
If you own your flat, you have more than 1 bedroom and you currently don’t use any of the rooms, considering renting any spare room.
In the UK, the rent a room scheme means you can get up to £7,500 in rent income each year without having to pay any taxes. Only any excess amount above the £7,500 will get taxed at your marginal tax rate.
You can start by asking friends or family if they know of anyone who would be interested to rent a room. You can also try posting your room in social media or property rental websites.
3) Short term lets – Rent you flat for a short term period and use this money to reduce your accommodation expenses
Short term letting, typically up to 6 months, is a good way to get some extra income, usually at a much higher rate than long term letting, while not committing your flat/house for long periods of time.
You can do that via a real estate agent or online platforms such as Airbnb or Vrbo.
Until the next article or video make informed financial decisions!