How to save for your first home
Let’s be honest, saving for your first home is a daunting task. When you are looking at that final figure, it can seem downright impossible but with some patience, planning and will power, you can make your dream home a reality. To help you out, we’ve put together some tips and advice to guide you toward your goal.
Ditch Your Debt
First things first, before you can think about a mortgage, try to pay off any lingering credit card debt or personal loans. This will help you increase your borrowing power.
Saving for your deposit
Once you have done the calculations and figured out how much you can actually afford, it’s time to start thinking about that deposit! Sure, you might luck out and win the lottery but banks love to see real, regular income-based savings.
Preferably, set up a high interest savings account first. Then set up an automatic transfer that will move a portion of your income into savings account as soon as it comes in – this will remove the temptation to spend and help you to save faster. When possible top up your savings. It doesn’t have to be much; every little bit adds up!
One of the advantages of building your first home rather than buying an established one is that the required deposit is generally much less – something to think about!
Set a budget
This step is not optional! A budget is an essential tool of the successful saver. Start by keeping a record of your spending over a fortnight, then weight this figure against your income. Examine the areas where you can save and set yourself realistic saving goals. If your budget is too tight it’s going to be hard to stick to it. Although you should cut back on luxuries, don’t cut out all the fun stuff!
Tips & Tricks
For the most part, the secret to saving is changing your habits. You don’t have to survive on nothing but ramen noodles, simply make smarter choices.
- Limit your luxury spending. You don’t have to deny yourself everything, just cut back on things like dinners out, massages, takeaway coffee and big-ticket items, like a new iPhone.
- Make a grocery list and don’t deviate. Impulse buys are the enemy!
- If you’re willing to compromise a little, buy generic brands or items on special when you can.
If you are really dedicated, you can always move in back in with your parents. We know, it sounds drastic, but just think how much quicker you could save without paying rent.
First Home Buyers Grant
Don’t forget about the First Home Buyers Grant when building your brand-new home. The First Home Buyers Grant is a one-off payment to encourage and assist you when seeking to purchase or build a home.
Financial advantages to building
Some lenders offer no repayments until construction is complete. This means you won’t have to worry about paying your mortgage and rent at the same time.
No stamp duty on your residence. That’s right! You only have to pay stamp duty for your block of land, meaning you can potentially save thousands.
Getting a guarantor
A guarantor could help you buy your property sooner. If you don’t have a 20% deposit, most lenders will require that you pay the cost of Lenders Mortgage Insurance.
However, a family security guarantee could help you buy a new home using a lower deposit and without paying the cost of Lenders Mortgage Insurance.
Think you can’t afford to build your own home? Think again. Ross North…