Buying your first home is like climbing a mountain, daunting, frightening and damn easy to give up before you’ve even started! But it is possible, and the hardest part is starting. Setting goals is really important; choose a price range you are comfortable with but start small! You don’t have to have it all at the start, it’s better to start small and affordable and keep trading up! At the end of the day, you have to be able to sleep at night with a comfortable level of debt. At least a mortgage is good debt!.
Be savvy about real estate, get out there and go to open houses, even if you don’t have a cent saved! It’s a learning curve. Know the good areas from the bad, the types of houses, bedroom number, land size and what they sell for, not what they are listed at! Be an informed buyer and don’t pay a cent more for a property then you have to.
But first things first. Saving for a deposit.
Get Rid of Bad Debt So You Can Afford Good Debt
There is no point saving for a deposit if you have a credit card debt, car loan, boat loan, defaults on top of rent – it will truly be impossible. Set your sights first on clearing those debts; think of it as good practice for when you have a mortgage. If you’re not a wizz with money, cut up the credit cards. Do you really need two cars? Do you really need an expensive car? These are serious questions you should address if you really want your own home. Not only that, it will be harder to get a home loan if you are already overloaded with payments.
What can you do without? Now’s the time to make the serious sacrifices that owning a home will entail.
Debt Free? – Start Saving!
Okay so you’ve worked hard and apart from paying rent (or even better living rent free if possible), you can start saving for your first home. Do a budget and work out exactly how much money you can save from every pay and get serious! Try and aim for 35 – 50% – even more if there are two of you and you are both working. Put the money into a higher interest saving account that you can’t access. This will help you out when your having a weak moment (we all have them!).
Once you’ve done a budget, turn it into a graph and place it on the fridge or somewhere you will see every single day! This is a good incentive to keep working towards that goal. Once your half way to your deposit, this is a good time to start ‘loan shopping’. Ask friends who they go through and why, go to all the banks, all the building societies and mortgage brokers. There is no such thing as too much information. Surf the internet for the best deals and talk to your bank manager about what you plan on doing. They may need a six month proven savings record so you can be prepared for when you have to do it for real!
What Government Assistance is Available?
The Australian Government offers the First Home Buyers Grant.
It is different state to state – so check out the link to find out what is available in your area.
There is also the First Home Savers Account
This is a Government initiative to encourage Australian to save a deposit for their first home. There are a few terms and conditions – but if you fit their criteria – it can be a really great way to save. The account has to be open for four financial years and the Government will contribute 17% on the first $5,000 deposited. See the link for more details.
What tips do you have for saving a deposit? How did you manage to save the deposit for your first home?