The first step to buying your first home is saving a deposit, and with 20% the required deposit for most lenders, the task can feel daunting.
Just like any savings plan, there are steps to take and changes to make, and in time they will pay off. When saving for your first home deposit, follow this plan and remember – every little bit counts!
Speak to a lending expert to determine how much you can borrow, then start to research the market in your borrowing bracket. Once you have a figure in mind, you know how much to save to get your 20% in the bank.
Most first homeowners are also entitled to grants and cuts in fees such as stamp duty, so be sure to look into how much those entitlements knock off your required amount.
Remember, some lenders will approve a bank loan with less than a 20% deposit, however you may be required to pay LMI (lender’s mortgage insurance) which can be a large upfront cost.
There are also lots of fees to prepare for such as pest and building inspections, solicitors, moving fees, cleaning your rental, insurance and connection fees for electricity and internet.
Prepare a Budget
Figure out where your money goes each week. Work out what expenses are essential, and which you can go without. Tracking your spending for a few weeks will allow great insight into where your money is being spent and will give you a greater understanding of where to cut back.
For example, three takeaway coffees a $15 week adds up to around $780 per year – that’s almost $1000 closer to your goal!
There are many online tools and apps that help to work out personal budgets, so look for support if you are feeling lost.
Automate Your Savings
Open a high-interest savings account that does not have access via a card. Set up an automatic transfer on payday and make top-ups when possible.
Be open to making extra money, and add all extras (no matter how small) into your savings account. In time they will add up and will get you to your goal faster.
Some things to try:
- Sell unwanted items and add the money straight to savings
- Eliminate debts such as credit cards and personal loans
- Pick up a casual job, or take on some freelance work in your profession
- Put any work bonuses or cash gifts straight into savings
- Try repairing items rather than replacing them, and avoiding shopping when you
- Switch to cheaper brands for toiletries and groceries, as these little changes can add up.