Deciding to start saving to buy a home is a major decision. It could appear like it’s going to be a long hurdle, but there are ways to achieve that faster.
The takeaway to getting to your savings goal is to be realistic about what you can afford to buy. For the majority, the first house is a step on the property ladder than the forever home.
How much do you really need for a house deposit?
The Australian Bureau of Statistics says that the mean house price now is over $600,000 and even more expensive in the capital cities.
The house deposit needed is ideally 20% of the purchase price of the property but you can set your foot in the property market for as little as 5% deposit (which can also be quite a significant amount).
There are ways you can do to save faster.
Here are some home deposit-boosting tips you might want to consider:
1. Look into what you have been spending on, and cut expenses.
Without analyzing, it is easy to spend money. These can be daily coffees, taxis, clothes, and subscriptions which all affect your saving power.
The first step to do when deciding to save is to look into where your money is being spent. First thing is to go through your bank account a make a note of every amount you spent in the past month.
Move back home or into a share house, if it is a viable option for you, sharing a house with family or friends is a good idea. Opting for a share house could help you potentially save money by lessening the amount you pay on rent and bills.
Go for public transport, running your own car is quite a fortune. It’s more than just the petrol, think of insurance, repairs and maintenance, and depreciation. That is more than just a few dollars a year. If you’re in a place with decent public transport, bike lanes are also to be considered, you could save more money by going car-free.
Check your lifestyle, limiting takeaways meals and coffees, as well as some other lifestyle adjustments, can substantially help you save up. Consider drinking instant coffee once in a while. Reduce your night outs and other entertainment costs. Look for inexpensive ways to enjoy. If you have acquaintances in the same situation, look into taking turns hosting dinner parties, movie and game nights at home.
Rid yourself of things you don’t use, stop paying for things you don’t use or need. Look into discounts and cheaper alternatives on things like memberships, subscriptions, utilities, and insurance. It is worth considering the longer-term advantages.
2. Open a savings account and savings plan
Keep track of your finances, saving takes dedication and planning.
Set up a designated account, one way to ensure you meet the target savings is to put up a “house deposit” account.
Consider a term deposit, these savings options allow for fixed, competitive interest rates and there are term options you can choose to match your needs. A term deposit allows you to lock away your money for a term with a set interest rate. Having your money held up for you can help you save.
3. Avail of all the first home buying assistance you are eligible
First Home Owner Grants - you might qualify for an FHOG if you’re starting out. Each state and territory have varied rules and condition on how much you get from these grants, and the terms can change too.
Stamp duty concessions - you might also be eligible for these concessions, which also varies among states/territories, if you’re getting your first house. This would be a real help because stamp duty can add another 3-5% to the purchase price.
You might not be ready to purchase a home now, but with perseverance in saving that deposit, eventually you will. We are here to guide you every step of the way. If you need someone to hold you accountable on saving that deposit or if you have questions on how to get started in planning for your home purchase, do not hesitate to contact us at 07 4317 4048 or send us an email info@mortgagealley.com.au
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