Saving for your first home seems like a mammoth mountain to climb. There is no time better than to start now. Below are some handy hints to help you get started on your way to saving for the deposit on your first home.
1. Analyse your current spending
Take stock of your current financial situation and spending habits. Gather as much information you can on what you’re currently spending. Your lender will want to know about your spending habits and any regular bills you have.
2. Set a budget
Almost all good saving plans start with a realistic budget. Once you know how much you’re spending, try to find areas where you can cut back.
Some changes to your usual spending habits will make a bigger difference than others. Scaling back your daily coffees can be a great start, but moving back home for a short while will help your savings to add up faster. Once you know how much you’ll be spending each week, set a realistic target and stick with it.
3. Get on top of your debts
It can feel hard to think about long-term saving if you’re struggling just to keep on top of the debts you already have. Consolidating your debts can be one smart way to create a path forward out of multiple payment dates and interest rates. And the fewer debts you have, the more likely your bank will look favourably on you when the time comes to deciding on your home loan application. However, beware of the cost of consolidation, the interest rate of the new loan, and the costs to get into and out of it.
4. Start saving
Ideally, you’ll want to save as much as you can for a deposit. This will mean you don’t need to borrow as much and the less you’ll pay in interest. If you have a smaller deposit your bank or lender may charge you Lenders’ Mortgage Insurance to protect themselves and this is a very large cost, sometimes running into many thousands of dollars.
If you’re not happy about the time it could take you, you might want to consider a more affordable property or adopt more stringent saving measures. Keep in mind there are some other upfront costs of buying a home outside of the deposit that you’ll need to be able to cover.
5. Look for help
Depending on your circumstances, help may be available for you to reach your deposit saving goal sooner. There may be state or federal homeowner grants available, and sometimes builders have special offers for first home buyers.
Finally, consider whether your parents or other family members may be willing and able to help you out with a one-off financial gift or interest-free loan.