March 17, 2022
Dreaming of your first home (or perhaps your forever home) in your favourite South West location?
When it comes to saving up for a new home, it pays to spend a little bit of time thinking about your savings strategy. Doing your homework and setting some realistic savings goals can help you make your dream South West home a reality much sooner. So, where do you start?
Here are some tips on how to get started on saving for your new home.
Buying a home is probably your largest financial undertaking in life; it requires long-term commitment and planning. It’s not something that happens overnight – there’s a lot of steps involved in becoming a homeowner, so it helps to have a clear goal in mind to keep you on track.
The best place to start is with how much you’re going to need. This means you’ll need to work out approximately how much you want to spend on your new home. To figure out how much your home is likely going to cost, you’ll need to do some research on property values in your area, a Ventura South West New Homes Consultant can assist you with this! If you’re building, how much is land likely to be and what are the costs involved in building a home? You can get an idea of how much your new home will cost by browsing our home designs and house & land packages. Finally, how much of a deposit will you need to save? In most cases, it’s best to aim for a 20% deposit, as if you borrow more than 80% of the purchase price, you may be required to pay lender’s mortgage insurance (LMI), which includes added costs. If you’d prefer to get into the property market sooner, there are many lenders that will finance up to 85-95 percent of the value of your home, although you’ll usually be required to pay LMI. If you’re considering a low deposit home loan, our New Homes Consultants and inhouse brokers can help with this!
If you’re a first home buyer, you may be eligible for the $10,000 First Home Owners Grant which can be put towards the cost of your new home.
After you’ve determined your savings goal, consider when you’d like to purchase your new home and how much you’ll need to save each month to do it, this will help you to get a plan in place.
Establishing savings milestones, such as quarterly or annual goals that you create for yourself, can help you stay on target when saving for a new home. Saving for a house deposit might take years depending on your financial situations, and setting smaller goals can help you stay on track. Reaching a minor goal can feel like a reward, and adds encouragement to help you stick to your savings strategy.
No one likes to track their spending, but it can be a great way to identify where you can curb some of your spending. Gaining insight into the way we spend our money not only helps us to take control of our spending but it also ensures that we are able to meet our financial goals in a way that is sustainable and that won’t have a negative impact on our quality of life. Creating a budget and making even just small changes is a great way to fast track your savings goals.
Consider what you’re willing to give up and how you may make adjustments to your spending patterns. Some adjustments may have a far greater impact than others, depending on what you value!
If avocado toast and regular outings with friends are a high priority for you, there are other ways you can save! Reduce your costs in other areas; perhaps by minimising shopping trips, catching public transport more regularly or even moving home with Mum and Dad to reduce your living costs.
Do you have a personal debt or credit cards that you’re still paying off?
Paying off your debts as soon as possible is a good idea when buying a home as it will allow you to save more efficiently. Being debt-free will also boost your borrowing capacity when it comes time to get a loan, as the bank will factor in any credit cards or debt when working out how much they can lend to you. Have a chat to one of our New Homes Consultants about our debt-assist options available.
If purchasing a home is your main goal, then the first thing you should do is contribute to your savings fund after you get paid.
Making monthly deposits into a separate savings account that earns interest may help you save by removing your saved deposit money from easy visibility and access. Transfer the funds as soon as you get them, or better yet, set up an automated transfer so you don’t have to worry about it.
You’re working hard to save, but you also need to save wisely. Maximise your savings with a high interest account. If you’re a first home buyer, you can also take advantage of the First Home Super Save Scheme to minimise the tax on your savings.
On that note, there are many helpful tools out there to help home buyers get into their new home sooner. If you’re buying your first home, you should check to determine whether you are qualified for the First Home Owner Grant and the stamp duty exemption.
Asking a family member for a loan or acting as a guarantor might also help you purchase your first house sooner. Just be aware that becoming a guarantor is a significant commitment that you and your family should carefully consider. Government initiatives like the New Home Guarantee can also help qualified buyers get into their first home sooner, as the government effectively acts as guarantor on a portion of the buyers loan.
For assistance and advice on securing finance, speak to our home finance experts!
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