Owning your own home is one of the major life goals for most people. Saving for a deposit can seem daunting at first, but it doesn’t have to be.
Here are a number of things to consider to get you started and on track for home ownership sooner than you think.
Analyse your current financial situation
Ok, this one seems a little obvious, but knowing where you’re starting from will help you set up for success. Think of it as your first brick on the foundation! Understanding your financial situation will get you in a good place to start setting your budget. Scrutinising your current financial situation should include things like current assets, income, any debts and living expenses. Now you’re able to see how much you’re able to save each month to put away for a deposit.
Know how much you can borrow
Having an idea of the amount you can borrow – which is determined by your current financial situation – can help you figure out how much you’ll need to save. There are a number of borrowing calculators out there that can help give you a ballpark figure, but they don’t confirm the size of repayments you’ll be able to make after you meet your other living expenses and financial commitments.
It’s always best to speak to your broker to get a more detailed assessment. With a loan pre-approval, you’ll know exactly how much you can afford to pay for a property. It gives you a solid understanding of your finances and a clear spending limit. Getting pre-approved through a reliable broker can also help identify possible issues that you may not be aware of, as well as spot something that may have been overlooked.
Know how much you need to save
Once you have an idea of your borrowing capacity, you should also consider additional fees and associated costs when purchasing a property. These include:
- Lenders mortgage insurance
- Other upfront costs are associated with buying a home
- Your legal fees
- The building fees
- How much will stamp duty set you back
- Moving costs
- And don’t forget that all-important insurance!
How long will you be saving for?
So, if you know how much you can save per month and how much you can borrow, you can now figure out roughly how long it’s going to take to save that deposit!
Check out this handy savings goal calculator to work out:
- How long it will take to reach your savings goals
- Steps to take to put your plan into action.
When you’re close to your goals, seek pre-approval, which means lender has agreed in principle, to provide finance towards the purchase of a home without committing to final approval.
Consider if you’re eligible for any government grants
If you’re a first home buyer, you may qualify for the following:
- First homeowner grant
- First home super saver scheme
- First home loan deposit scheme
- Homebuilder grant
Tips for saving your deposit
- Cutting down on unnecessary spending
- Find ways to generate a second income (selling unwanted goods, getting yourself a side hustle)
- Review what you’re spending regarding bills. Make sure you have the best deal when it comes to utility providers
- Defer any big purchases… maybe it’s not time for that BMW!
One of the easiest ways to get the ball rolling with your home loan deposit is to reach out to your mortgage broker. We’re here to help you with anything you need, and with years of experience, we will be able to get you on the road to home ownership in no time.