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SAVING FOR YOUR FIRST HOME

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Saving for Your First Home
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  • 30 September 2016

SAVING FOR YOUR FIRST HOME

With the recent boost to the First Home Owners’ Grant in Queensland, every potential first home buyer is thinking about how they can take advantage of this incredible opportunity. If you’re considering buying your first home, we have some great advice for you to start saving now.

In order to be ready to buy your first home, you need to have the following things in place:

A realistic deposit – The bigger the better! 20% of the purchase price plus enough to cover additional costs is a good goal to aim towards.

Regular Savings – Evidence of regular income in your bank account and a good employment record will make it easier for you to get a home loan.

Pre-approval for a loan – Ask your lender for more information to compare the different loans available to you, this will help you make your decision.  Once you decide on a loan and have been pre-approved, you’ll know the repayments and what you can afford to spend on property.

Additional Savings – These will act as a buffer if interest rates rise and repayments increase. Alternatively, choose a loan that allows extra repayments so you get ahead early on.

TIPS FOR ENTERING THE MARKET

Widen your property search – It can often be a challenge to find something in your ideal location. Consider other areas and potentially moving further out from the city. This is a smart way to enter the market affordably.

Start small – Consider a smaller house or apartment to enter the market then work your way up. This is particularly good if you have a specific location you want to buy in.

Compromise on the finer details – Properties in need of renovation are generally a cheaper option for first home buyers. Look for a home that’s maintained its structure and renovate it according to your budget.

Consider an investment property – Investment properties outside capital cities can have good rental yields, meaning lower capital gains. The greatest benefit of an investment property is that a tenant repays your loan while you build equity.  This allows you to sell the property when you’re ready and use the money as a deposit on a property you really want.

HOW MUCH CAN YOU AFFORD?

The best way to figure out how much you can afford to spend on your new home is to maintain a household budget and review it to see how much money you’re saving and areas you could be saving in. If you don’t already have a budget planner, you can use this one. https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/budget-planner

Use this budget planner to:

  • Take what you’re currently saving towards a deposit and add in what you pay in rent to work out how much you can afford to repay.
  • Work out how much you can afford to borrow without stretching your budget too far, this ensures you have a buffer.
  • Include all additional costs that come with buying a home. This includes stamp duty, legal fees, lender’s mortgage insurance, as well as ongoing costs like land and water rates, house and contents insurance and repairs.

These are some of the most important things to consider when buying a home. We will be posting more information and useful links for first home buyers over the coming weeks so keep checking back!