Saving for your first home? Have rising property prices been stressing you out? With the Australian housing market going bonkers in the last few years, it can be a bit daunting thinking about having a big enough deposit to buy your first home. So what can you do to turbo charge your savings? We’ll take you through a few tips and tricks.
Work out how much you need to save
When you’re saving for your first home deposit, aim to save at least 20% of the price of your home. Having a deposit of at least 20% means that you can avoid paying lenders mortgage insurance (LMI). Don’t forget, your deposit isn’t the only thing to save for. There are lots of other costs when it comes to buying a home such as stamp duty, upfront fees and charges you might have to pay to your lender, removalists, lawyers and the list goes on.
Budget, budget, budget!
This is pretty obvious but it’s worth repeating that you really, really need a budget. How much money do you have coming in and going out each month? There are lots of online tools and apps that can help you get a good eye on your finances and streamline the budgeting process.
Pay off your existing debt
Already having a few loans outstanding can make saving for a deposit difficult and can also hurt your chances of being approved for a home loan. If a lender sees you already have quite a bit of credit in your name, they might think you’re not in a great position to take on any more and think twice about approving your home loan application. Try to consolidate and pay off your existing loans as soon as possible.
Revamp your savings
Even with interest rates at historical lows, there are many high interest savings accounts out there offering bonus rates for new customers. Build a savings plan into your budget and automatically deposit a set amount into your savings account each month.
While you’re at it, take a look at your other banking products. Are you paying monthly or annual fees on your transaction account or credit card? There are many fee-free products out there, you just have to look.
Check if you’re eligible for the First Home Owner Grant (FHOG)
The first home owner grant is a one-off payment available to eligible people buying their first home in Australia. It’s a sizeable chunk of money that lenders may consider as part of your savings or deposit. Each state or territory has their own grant and eligibility criteria attached. For more information, check out Aussie’s handy guide: Getting and using the First Home Owner Grant.
Have you got any tips for savings for your first home deposit? Let us know in the comments!
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