Buying your first home can feel a bit daunting, but with the right savings plan in place, you might be holding the keys to your dream home sooner than you think.
Get the full picture
Firstly, what can you actually afford? You’ll want to start here and work backwards. Start with a basic budgeting exercise to determine exactly how much you’re spending each month in comparison to your earnings. This will also help you identify areas you might be able to cut back in. Budget calculators are a great tool to help make this step a bit easier.
Once you know how much money you have left after paying all of your expenses, you can now determine what you’ll realistically be able to afford in monthly mortgage payments. Try our borrowing power calculator to see what’s possible.
Determine what you need for a deposit
Now that you’ve worked out the total amount you can comfortably borrow, it’s time to determine exactly what you need to save for your deposit. Most lenders require 20% deposit to avoid lender’s mortgage insurance, however if you’re close to your 20% deposit and your dream home comes along, you’ll have to weigh up the cost of adding lender’s mortgage insurance (LMI) or missing out on that home.
Don’t forget to budget and save for stamp duty as well, which works out to be approximately 5% of the total purchasing cost.
Let the saving begin
Now that you have your end goal in mind, it’s time to start saving! Here are a few things to consider to get you there faster:
Move back in with your parents
It’s not for everyone, but if you have the option you’ll be able to pocket the amount you’d be paying in rent each week.
Open a bonus interest savings account
These types of accounts allow you to earn more interest than a typical everyday account and some of them even offer bonus interest for every month you haven’t made a withdrawal. Explore our range of savings accounts.
Put your savings on auto-pilot
Make sure you prioritise saving by automatically transferring money into your savings account when you get paid.
Consider your investment options
You may want to consider investing in shares or a managed fund to boost your savings power if you are still a year or more away from reaching your savings goal.
Take out a term deposit
If you’re looking for a low risk investment, term deposits are a great alternative to shares as they offer a set return.
Explore the first time home super saver scheme
This scheme is relatively new and allows you to access your super money in order to pay for your deposit.
Accomplishing your goal
Once you’ve worked out what you can afford, how much money you’ll need for a deposit and any extra costs such as stamp duty and legal fees, you’ll have a much clearer goal in mind.
So, go ahead and give it a try – the sooner you begin your savings plan, the sooner you’ll be planning for your first house warming party!
If you’re saving for a deposit, looking for pre-approval, or need support on your home ownership journey, we’re ready to help.
Any advice or information provided on this site is general advice only, and does not take into account your personal objectives, financial situation or needs. Before acting on any general advice you should consider its appropriateness given your personal circumstances. You should consider the Terms and Conditions for a product before acting on any advice to acquire it. Please consult with a financial adviser for personal financial advice.