Owning a home is the great Australian dream, yet for many people these days that’s exactly what it feels like – a dream! No matter where you live in this great country, buying a home is not impossible whether it be for an investment or your forever home. Here are a few tips to guide you in the right direction to achieve your dream and make it become a reality:
Analyse your current spending
Look at your spending habits and see where you can cut back on those items you tend to splurge on.
Set a budget
Now that you have looked over your spending habits you now need to set a solid budget. This will assist you finding areas where you can cut back. Changes to your usual spending habits will make a big difference. Scaling back on your daily coffees, moving in with relatives (if this is an option) will make a much bigger difference to your bottom line.
By writing down your essential costs (such as rent, debts, bills and food) and subtracting this from your income, you are left over with the amount you could potentially save for your deposit. You should save an amount of which you can expect your home loan repayments will be, or similar to this.
Be consistent and stick to your savings goal
A good way to do this is set up an automatic transfer to your savings account. It may be a good idea to transfer the money the day after you get paid to make it hard to get your hands on it. Automatic transfers allow you to 'set and forget', knowing that your savings are growing without you having to transfer them manually every time you get paid.
When it comes to applying for a home loan, this will show the lender how you are capable of making regular repayments.
Deposit into a high interest savings account
Make the most out of your money. If you leave it in your everyday transaction account, you might be tempted to use the cash. You will also earn less interest than you would by transferring your savings to a high-interest savings account.
Some of these accounts offer bonus interest for every month you don't make a withdrawal, meaning you will be less likely to touch the money unless it's an emergency.
Get on top of your debts
In your budget there should be a certain amount to pay down any debts you may have. Consolidating your debts can be one smart way to create a path forward out of multiple payment debts and interest. Once you have paid off your debts, start putting more money towards your savings.
Look into deals
Look around for deals that can save you money, these can be available from many service providers, from switching supermarkets to bundling all your insurance with just one insurer, mobile phone accounts etc.
Unfortunately, there are no shortcuts to saving for a deposit and buying a house is expensive but worth it in the long run. You need to learn to balance out short term gratification with long term objectives and be accountable to yourself. Next step once you have started saving for your deposit is talk to a broker or banker to get helpful advice on how much you need to borrow and what your borrowing capacity will be before starting your search for your new home!