Dreaming of swapping renting for home ownership? From budgeting for a house deposit to understanding how much you can borrow, here are our expert tips to get you started.
There’s no doubt that being a first-time home buyer can be as overwhelming as it is exciting. Whether you’re in the beginning stages of saving or starting to look at property, there’s probably a million questions flying through your head… How much deposit do I need to buy a house? How to save for a house deposit? How much can I borrow? What is Lenders Mortgage Insurance?
With so much industry jargon and changing rules, talking to an expert can help enormously with understanding the process and making sure you get the best bang for your buck. That’s why we’ve put together some tips and tricks to help you plaster that ‘SOLD’ sign on your first home that much faster.
1. Start a budget
When it comes to purchasing your first home, a budget is absolutely key. Not only does it paint a clear picture of your finances by showing you how much money is coming in and going out, it also creates a solid action plan that helps you figure out what’s needed to achieve your goal.
A good budget should be a living document that you can access easily (like on your phone) and something you update regularly, so you have a clear picture of your progress. The more tuned in to your goal, the more likely you are to put the right measures in place to achieve it.
Once you’ve set up your budget, look for any costs that could be eliminated. Are there services you don’t use anymore that you’re still being charged for, like a gym membership or streaming service? The more money you can save on unused expenses, the quicker you’ll get to your savings goal.
2. Set up a high interest savings account
Saving for a house deposit doesn’t mean you have to live off two-minute noodles for months on end. It’s all about being clever. By opening a high interest bank account and setting up regular monthly debits from your everyday account to your savings account, the faster you’ll reach your goal.
Remember the bigger the house deposit, the more options you’ll have available in terms of lenders wanting to obtain your business. A larger deposit will also reduce the amount of Lenders Mortgage Insurance (LMI) you’ll need to pay, which could end up saving you thousands in the long run.
3. Work out how much you can afford to borrow
How much you’re able to borrow will depend on your income, the size of your deposit and also your credit score. Eligible first-home buyers can take advantage of some of the government first home buyers’ schemes and state government grants, which have all been designed to help make buying your first property easier.
4. Get the right home loan
When it comes to securing a first time home loan, we recommend taking the approach of ‘do it once, do it right.’ Having your loan set up correctly now and being realistic in your monthly repayments and how much you can afford to borrow will help you avoid any extra fees or charges down the track, while also making sure that you can pay off your new home as soon as possible.
5. Talk to an expert
Don’t wait until you’ve built up a healthy house deposit to sit down with a mortgage broker. Meeting with a broker early on can help you set goals and guide you towards your first purchase – you may even learn that your dream is closer than you think.