If you are buying a house or apartment for the first time, there are a number of things you need to keep in mind. So we’ve compiled a savings strategy for first home buyers, so that you can reach your goals, faster.
Create a Budget
It is not easy to create a budget and stick to it, but budgeting allows you to exercise control over your money and spend it wisely. Set a budget and track your daily expenses. Whether your goal is to buy a house or go on a holiday, this will allow you to stay on top of your spending habits. A main benefit of having a budget is that it enables you to save for what you need, instead of what you want. It also reduces your financial burden as you develop conscious spending habits.
Spread Your Savings
It is important to spread your savings into different accounts and have an untouchable account. For example, you can save for different goals, whether it’s buying a car or planning a holiday with your family. Even if you save a small amount like $200 each month, you will end up having $2,400 in each account within twelve months, so be patient and focus on the end goal.
Keep Affordability in Mind
Buying a house is an emotional decision. However, it can turn out to be a very expensive decision if you don’t do your research. When you are buying a house for the first time, keep your budget in mind. Look at your ideal suburb, along with suburbs surrounding, because in some cases just one suburb over can be the difference between affordable and unaffordable areas. Be flexible while choosing a property and location and keep in mind the important of locality to amenities such as public transport and supermarkets.
Often reaching your goals takes more than just one year of saving; so set milestones when it comes to saving to reach your ultimate goal. Whether that’s buying a house or saving for something else, devise a plan and stick to it while understanding that it may take more than a year to get there.
No achievement should go unnoticed. Everyone should reward themselves whenever they reach a milestone. For example, if you have set a milestone to save $10,000 within six months, reward yourself when you achieve that target. This will encourage you to keep saving and reach your goal. Keep in mind, however, that the reward should not be costly.
Don’t Waste Money
Those who save money, spend their money very carefully. Small changes can have a big impact on your overall spending habits; park your vehicles in cheapest parking space, or cut out your daily coffee run. It’s important to remember that just because you can afford to buy something, does not mean you should. Stay focused on your goal and motivate yourself with milestones.
Seek Help from Friends and Family
As a first home buyer, if you want to buy soon rather than later, your parents can act as a guarantor for your home loan. Beware however that different lenders have rules for such arrangements.
No matter what you do in life, they key is to have patience and watch the market carefully. Depending on the time of year, this will make a huge difference towards what’s going on in the property market. Often, in January, the market is in high demand and only a limited number of properties are available. But the market comes back to normal gradually as the year goes by.
Develop Good Habits Early
This is yet another golden rule when it comes to saving for a new house. You must start saving money as early as possible. The sooner you start, the higher are the chances that you will be in a better position in the future. Set realistic targets and save accordingly. Keep in mind your goal deposit you need to reach, in addition to other charges, such as stamp duty, legal fees, etc.
Last but not the least, work hard to achieve your goals. If you think you need to make more money, find a second job on a temporary basis. This will allow you to make money faster and enable you to buy a house sooner than later.
Secrets to doubling your deposit
In this era of this fast-tracked life, the cost of living is constantly rising and it is hard to save money. This makes it harder for a person to keep money aside for a home deposit. But if you have the right tools, you can definitely climb up the ladder and double your deposit in no time. All you need is a well-thought-out strategy that allows you to make more savings while reducing the time it takes to reach your goal.
It does seem impossible from the sound of it. First of all, the prices have dramatically increased in the housing market during the past few years. The number of buyers has also gone up, which makes it hard and financially challenging for home buyers.
However, what many people are not aware of is that there are only two ways to save a deposit fast, i.e., to spend less or save more money. Yes, it is as simple as saying it, but it needs creativity and discipline. Below are some of the tools you can use to begin your journey of getting a home.
This is one of the most effective tools to climb your way up to fulfilling your dream of buying a house. Budgeting allows you to discipline yourself in terms of spending money. In fact, it makes you aware of what your current spending habit is and how much you need to spend on a day to day basis.
Creating a budget does not take long. Many people tend to create a very complex and detailed budget. It is hard to maintain and update that budget on a regular basis. To keep the budgeting simple yet effective, you can use TSL system, i.e., Tax, Savings, and Life. Keep 30 percent of your income to paying taxes, 20 percent in savings, and spend the rest of your gross income on getting what you need or want. You can always build on it further and add more categories as you get the hang of it.
Whether it is your long-term debt or short-term debt, it is very important to manage it properly or else you will end up in a pile of excessive interest cost. There are so many people who do not pay credit payments at the end of the month. The cost may not be very high at first, but if you do not manage it from the beginning, you may find yourself trapped in a downward spiral of debt.
Cut down on expenses and keep a certain portion of your income aside to pay back your debt. The more you discipline yourself, the better it is for you in the long run.
Streamline Your Banking Habits
Do not put your money into just any bank account, put it into a high-interest savings account separate from your everyday account. Make automatic payments each week when you recieve your pay so that it sends the money directly to this account and you cannot touch it.
First Home Grants
Being a first-time homeowner, you can also make use of the QLD first home owner grant (FHOG). The amount was initially $7,000 (tax-free) but it varies from state to state and is $15,000 in Queensland. Following are the requirements of the grant:
- You need to occupy the property as your main residence within a year of construction or settlement
- You can only use the grant if you are buying a house for the first time
- You need to be an Australian citizen
- You should be at least 16 years of age, and
- You have not received FHOG before.
Try to save a deposit of at least 20 percent of the purchase price as it will enable you to avoid paying lender’s mortgage insurance. Save as much as you can; even a small saving counts. The more you equip yourself with the right tools, the better your chances are to reach your financial targets.
Chat to Hunter Galloway about our saving strategies for first home buyers now, call us on 1300 088 065 or email Nathan at [email protected]