Never say never – especially when it comes to purchasing property. At Now Living Realty, we are passionate about helping everyone into their own home. And that can be achieved sooner than you ever thought possible when equipped with the right tools and knowledge.
On the road to homeownership, it all starts with your finances and more importantly how much you can afford to spend on a home. There are two ways to save faster: save more or spend less. But, why not do both? Having a well thought out strategy and utilising all the home loan products at your disposal will help you get there in no time!
Read on for our top 5 tips to consider when saving up for that initial deposit.
First thing’s first: You need to assess your financial situation. This means establishing how much you can afford to borrow and deciding on a purchase price. Be realistic though – you might have to consider a smaller home, an older home or a home in a different area just to get your foot on the property ladder.
To get an idea of property prices in Perth, you should:
– Research properties in your area of choice and surrounding suburbs
– Speak to the Now Living Realty team for honest advice on suburbs that are currently offering great value
– Read the property section in your local newspaper
Also keep in mind that you can use the Keystart Home Loan option as well as the $10,000 First Home Owners Grant towards your deposit. These are great incentives there to help buyers who meet the eligibility criteria get into their new homes sooner.
For instance, the Keystart Low Deposit Home Loan is available to help Western Australians finance an affordable home where other home loan lenders may not be able to assist. It only requires a 2% deposit and genuine savings to get you started.
Once you know how much you’re going to spend on a home, you’ll know how much deposit you need. Generally, most people aim to save 20% of the property price. The main reason why people choose a target of 20% is because it allows you to avoid paying Lenders Mortgage Insurance. However, if this doesn’t sound feasible, remember you only need 2% to get started with Keystart.
From here, you should set some savings goals. Make a total savings goal (your deposit) and set a monthly or weekly savings target to make it much more achievable. This should include your monthly income and expenses to give a realistic overview.
Now you have a better idea of how much you need to save, it’s time to think about paying down (or consolidating) your debts That way, you can concentrate on saving more! This includes personal debts such as:
– Car debts
– Medical cents
– Student loan debts
– Credit card debts
While chipping away is a good start, there’s also other ways you can become debt free. For instance, limiting yourself to only one credit card to cut down on unnecessary spending. It’s small strategies like this that will help you out when saving for your home deposit.
A few years ago, Australian real estate mogul Tim Gurner became infamous when he suggested that young people stopped buying avocado toast if they wanted to solve their housing woes. While we don’t necessarily agree, in the context of saving for a deposit, there’s something we can take away from this statement.
It’s simply about reassessing daily luxuries and cutting back on unnecessary expenses during this time. And if you’re not a big avo toast fan, there’s other ways you can save. For example, if you buy lunch everyday for work, perhaps bring it in from home 3 times a week? Or if you’re going for a night out, why not be the designated driver and save on drinks?
These are just some realistic tactics, but use whatever works best for you. It takes a lot of discipline and creative thinking, but it’s a great way to save. Remember, a little goes a long way. So ask yourself: Do I need it? It might seem annoying now, but just picture yourself at the end of this journey in your very own home. This should be all the motivation you need to say no to that pair of shoes or fancy coffee.
Now that you’re saving more and spending less, make sure you’re optimising your banking by opening up a high interest account for your deposit. There are a number of factors to consider when choosing the right account for your deposit saving needs such as interest rate and transaction costs.
By setting up a savings account that’s just for your home deposit, you can set up a direct transaction from your pay straight into that account on pay day. That way, you won’t even miss the funds going out! This will also help when applying for a home loan because you may need to show your lender a statement from your savings as proof of how good you are at making regular payments.
But whatever you decide to do, make sure you do your homework and choose the best banking option for you.
Being a part of BGC, a vertically integrated business, allows us to ensure that our customers needs are always kept top of mind. This then allows you to be comfortable when it comes to homeownership in Perth. We also work alongside The Loan Company and Simply Settlements who can all help you on your journey to buying a home.
Who said saving for a home deposit meant living off a diet of 2 Minute Noodles and nights in for an entire year? Have a chat to Now Living Realty about your options.