With property prices increasing across the country, many are scrambling to collate any funds they can to get into the Australian housing market. If you're a first home buyer, this article is for you! We will be sharing our top three saving tips for buying a house.
The Australian housing market has been tight throughout much of 2021. As a first home buyer, it's more important than ever to eliminate any emotion associated with buying a home. At REIF, we are reminding our first home buyer clients that in the current market you should simply just consider your first home as an entry into the market. Attaching any sort of emotion, or considering your property as your forever/ dream home is simply delaying you from getting your hands on the newest limited commodity; that is real estate.
While that approach may be anything less than desirable, doing so now will provide you with greater opportunities to potentially get your hands on your dream home in three to five years time.
Enough with this reality talk, though, let's get into the nitty gritty of this article. Here are our top three ways to quickly save for a house deposit.
First and Foremost, Determine How Much You Need
While this may sound basic, you need to determine your current financial situation and where you need to be. When buying a house, you should figure out how much you can afford to borrow. Across Australia, the average home has increased by 25.23% in the last 12 months.
Oh sorry, please let us repeat that. THE AVERAGE HOME IN AUSTRALIA HAS INCREASED BY 25% IN VALUE IN THE LAST 12 MONTHS!!!
Many first home buyers might find this discouraging. Though, understanding the affordable markets and how much you can afford to borrow is going to help you get into the Australian housing market before prices are expected to increase even further. REIF are comprised of a national team of finance and property experts who are being updated daily on the evolving market. When you have a team like ours behind you, we can support you in making informed decisions on where, what and how much you need to buy.
Additionally, when determining how much you need need to put down a deposit, it's imperative to understand how much you can afford in terms of legal fees, stamp duty (if any), finance repayments, plus so much more. Creating a budget that takes into account all of these costs will support you in quickly saving for your first home.
While in some instances you can get into the market with as little as a five per cent deposit, we strongly advise you take a more conservative approach. By that, we recommend you save up a 10 to 20 per cent deposit. Not only will this help you to pay off your home loan faster and help you to achieve your dream home sooner, but it will also help to eliminate the cost of other fees (such as LMI) which can also be costly.
Número Dos - Take Control of Your Spending Habits
Doing this can often make us feel extremely uncomfortable. However, that uncomfortable feeling can often act as a big reality check. Taking control of your spending habits when you're in the market for buying your first home can help you determine unnecessary spending habits. Money that you're spending too frequently on luxury items can instead be transferred into a savings account.
Budget planning tools are your best friend when scrambling to collate funds of any sort. Below are some useful, free online resources that can help you to take control of your spending habits, minimise unnecessary spending, and redirect those funds into saving for your first home.
Budget Planner by MoneySmart.gov.au
Budget Planner by ANZ
Budget Planner by CommBank
Hot Tip Number Three - Understand Your Concessions and Government Incentives
Did you know that when you're buying a house for the first time, you may be entitled to government grants and incentives? Well, if you didn't, you do now!
While the value of particular grants and incentives may differ depending on where in Australia you're located, you may be eligible for any one or more of the following incentives outlined below.
First Home Owner Grant (FHOG)
When buying a house for the first time, whether you're looking to buy or build your home, this grant is a one off payment to first home buyers who fulfill certain eligibility criteria. While it is a national scheme, the FHOG is delivered by each State and Territory under their own legislation.
The FHOG differs in value depending on where in Australia it is administered. In some areas in the country this grant can be more for those buying a home in regional locations. In some states, first home buyers can receive up to $20,000. Though, it's generally $15,000.
First Home Loan Deposit Scheme
This Scheme came into effect on the 01st of January 2020. Essentially, it allows first home buyers to buy a home with a deposit that's as little as 5%, all while saving around $10,000 in LMI. Similar to the FHOG, this Scheme is rolled out differently in certain States and Territories depending on the purchase price of the property. It also depends on whether you're purchasing that property in regional or capital city centres.
For more information on how this Scheme is rolled out, check out this link.
The REIF Difference
Throughout 2020 to 2021, REIF have assisted a significant number of first home buyers make their mark into the property market. All the way from helping you establish financial knowledge, sourcing you a suitable home loan product, and finding a property that fits into your budget - we can help!
If you're looking for a supportive team to get you into the market and help you with your long term financial goals - we're the go to experts! In fact, we recommend you check out this Case Study that outlines how we were able to get first home buyers into the market, purchase an investment property and amass over $256K in instant equity.
