Home ownership is the great Australian dream. The thought of saving your deposit though can be scary and daunting. The best thing though is just start and the earlier the better.
Realistically the more you can save, the better. You will need at least 5 – 10% of the purchase price, more to avoid paying for mortgage lenders insurance.
Don’t despair, saving for your home loan deposit isn’t easy nor quick, but worth it when you get the keys to your own home. And you don’t have to eat baked beans for a year either!
HOW TO SAVE FOR YOUR FIRST HOME DEPOSIT –
Start Saving Early
The earlier the better! If you get into the habit of saving 10% of every paycheck with your first job, you will be well on your way to having a healthy deposit by the time you are ready to purchase your first home. Set up a automatic direct transfer each payday to transfer a set amount of your pay into a high interest account. Because you aren’t seeing this money each week you won’t even miss it. Keep this up with every job and you will be surprised how quickly your deposit grows!
Clear All Other Debt
Reducing all other personal debts such as credit cards and car loans quickly will put you in a better position financially not mention the extra you won’t be paying on interest. Your personal debt is too large to face, speak to your bank manager about consolidating all debts into one loan and get it paid off ASAP.
Downgrade Your Car
Did you know that your brand new shiny car is worth the same as a house deposit? Your car will only depreciate in value over time, whereas that money placed into a high interest savings account will increase in value – getting you closer to own ownership sooner.
If you have two cars, consider whether you can make do with one for a while. After selling the car, put that money into your savings account along with the weekly expenses that car used to incur.
Plan Your Budget
Knowing where your money goes each pay is a great way to see where you can cut costs and save. Budget a set amount for savings and stick to it. If you are still at home with your parents and are living rent free (lucky you by the way) save the amount you would pay in rent and put that in your savings account as well. By saving the amount each week you will need to live in your own home will let you see how you will cope financially when you do purchase your new home.
Find A Second Income
What better way to get into your own home sooner than to increase your income and save that extra money! Find a nighttime or weekend job where you can earn some extra money to save. Sure it will be hard for a year or so, but we didn’t say this would be easy.
Reduce Your Rent
If you are renting consider moving into a place where the rent is cheaper and saving the difference.
Make Sure You Receive Your Grants
Check your state government to see what grants are available to you as a first home buyer.
Seek Professional Advice
Once you are well on your way to saving a deposit, seek advice from your bank or a mortgage broker. They will be able to help you select a product that is right for you and advise you on how much you can realistically afford.
Once you have your deposit and you know how much you can afford, contact us and we can show you a range of house and land packages suitable for the first home buyer.