One of the first hurdles on the long road to homeownership is building up a deposit for your home loan. Execution takes patience and discipline, but the financial security that awaits makes it all worth it.
Rarely do great things come easy, but in this article, we’ll discuss a few tips to simplify the process as much as possible.
Speak to a lender
Common sense would dictate that the first step to buying a home is looking for a house to buy. But in reality, the process likely begins with a call to your lender. They can tell you how much you can borrow, given your current circumstances, so you can refine your search for houses within budget. Inversely, your lender can inform you on how much of a deposit you need to save for a target purchase price.
Track your spending
To save money, you need to understand where your money is going and create a budget. The cost-effective tool that has stood the test of time is an excel or google sheet that syncs between your devices. It is recommended that you categorise your expenses into different buckets so you can analyse where you may be overspending. Of course, there are more sophisticated tools out there to add ease and convenience, but could come with an added cost, so find out what works best for you.
Explore government concessions
Federal and state government concessions are available to first home buyers looking to get into their own home. The 20 per cent deposit is still preferred amongst lenders, but not a requirement under the Home Guarantee Scheme. First Home Owners Grant, First Home Super Save Scheme, or stamp duty exemptions, could be factors in your property buying journey.
Consider co-living arrangements
For any individual or household, one of the glaringly huge recurring outflows is likely rental expenses. Downsizing to a cheaper rental apartment can give a big boost to your savings, but not without sacrifice. Alternatively, if feasible, you may elect to share the cost of rent by finding another housemate to reduce your weekly living expense.
Automate your savings
Set up automatic transfers into your savings account on salary day. This reduces the temptation of going over budget because you know exactly how much you can spend for the rest of the period. Additionally, ensure you have a great savings account rate with the cash rate climbing.
Stay disciplined and patient
As we said earlier, saving up for a deposit is not always easy, so adjust your expectations to be realistic. It could take some sacrifice away from your current lifestyle, and discipline to maintain strong saving habits. Removing your daily coffee, cutting a few monthly subscriptions, ordering less takeaway during the week could seem inconsequential at the time, but adds up when implemented consistently in the long-run. Trust the process and remember the goal at hand!
Any advice provided is general in nature and should be considered in line with your financial situation, needs and objectives.
Source: WLTH