4 budgeting tips for first home buyers
Saving enough for your first home deposit can sometimes feel like a huge hurdle when you’re starting from scratch.
But every year at least 80,000 singles or couples get onto the property ladder for the first time across Australia.
A big commitment
Buying a home is the biggest financial commitment most people will ever make and a big part of getting it right is saving for that all-important deposit.
The typical first home buyer loan is around $300,000 and in the countdown to saving a deposit, whether it’s 10% or as much as 20%, it’s important to create a budget for yourself and stick to it. But make sure it’s manageable.
First home buyers generally fall into the 25 – 35 year old age bracket and our research suggests around 70% of first home buyers are renting during the savings time-frame.
Once you’re in the savings mindset and working towards your deposit there are a few simple tips that may help you reach your goal.
4 tips to get your savings started
1. Get started by budgeting small
Don’t focus too much on the final total, which can seem overwhelming. Start small by getting your budget in order.
2. Plan & plan again
Plan around pay day: A good idea can be to plan your savings in accordance with the length of your pay period. Small goals quickly add up.
“Don’t forget, small goals can quickly add up.”
Short term goals: Starting with a short term, perhaps monthly, goal means you can adjust your budget quickly as cash flow and expenses change over time.
3. Be realistic
Make sure your budget is honest. List your income and all expenses, including food, car and entertainment and use a budgeting calculator to keep on top of your spending.
4. Make saving work for you
Everyone has their own way of saving. Find out what works for you.
Some suggestions could be:
- cut back on the massages or treatments or use special offer coupons;
- opt for DVD nights over a movie;
- move overseas travel plans closer to home or look for last minute specials;
- take your lunch to work;
- try quitting that daily double coffee;
- entertain at home rather than hitting the town;
- consider a ride share to work or even cycle if you can.
All these small changes can have a positive impact on your savings.
Banked savings show responsible savers
Genuine banked savings are something lenders will certainly want to see. Yes, tax refunds, an inheritance or gifts from your wedding guests will assist, but lenders like to see money coming from your regular salary deposits into a savings account.
“Genuine banked savings is something that lenders will certainly want to see.”
Make sure you research all the upfront and ongoing costs involved in buying a property, such as stamp duty, conveyancing and legal fees, strata fees if purchasing an apartment, and your local council rates.
Go to a lender once your deposit strategy is underway, so that your expectations for home ownership can be transformed from dream to reality with a little guidance from a professional who know the property path.
And of course, always keep an eye on the property market! Research seriously once you have saved around 5% of the purchase price and have an idea of what and where you want to buy.
Homebuyers usually take another year or so to build up the remaining 5% deposit plus extras, but looking early means you’re they are ready to buy wisely depending on the market conditions. Good luck!