When buying your first home you'll need to save for and pay a deposit.
For many first home owners it may seem difficult to fund this. However, it doesn't need to be. In this article we will show you this by providing a few of our favourite strategies for funding the deposit of your very first home.
Before we share our favourite saving strategies, it's important to establish how much you need to save. As a rule of thumb, you may need to save at least 20% of the purchase price of the property as your deposit. While some lenders require a bare minimum deposit of 5% of the property's purchase price, it's ideal to have as much there as possible. If you have a savings plan in place, it becomes easier. We will explain how with our five strategies.
Have an end goal in mind
It's important to know what you're trying to achieve. When funding the deposit of your first home, you need to determine what sort of property you're going to purchase, whether it be a townhouse, unit, or standard home. Once you know this, you'll need to figure out what you can afford to borrow and how much of a deposit you'll be required to pay. You should also consider if you'll be able to afford home loan repayments with all your other living expenses.
Pay yourself first
This can be achieved through an automatic deduction system. You can structure your finance to ensure that as soon as you're paid, a certain allocation of funds is automatically moved into a savings account (specifically to fund your deposit).
Automatic transfers are a great way to save as they allow you to 'set and forget' meaning you don't have to worry about transferring funds each time you get paid. If you're unsure of how to set this up, talk to your local banking branch.
Create a second stream of income
When buying a house for the first time you could consider options for generating a second income. One way is by renting out a room or garage space in that home.
Sell items you don't use
A strategy that we see people do when they're trying to save for a deposit is that they sell items around the house that they no longer use. Any cash made on these items can be saved towards a deposit. One bonus from this strategy is that it can make it easier for you during the moving-in process as it eliminates clutter.
Consider making extra earnings
When buying your first home, consider creating extra earnings to fund your deposit. A short term strategy is to get another job or ask for extra hours. Working extra hours on the weekend or on your days off from your employer may be something to consider, especially if you want to fund your deposit quickly.
More information
For more information on these strategies, check out this video:
If you're interested in getting into the market to purchase your first home, we would love to help! We assist first home owners and real estate investors across the country with finding the perfect home for their individual circumstances. Our details are provided below:
Ph: 1300 130 932
Email: clientservices@reif.com.au
We explore this topic on our eBook 'Guide To Buying Your First Home.' You can check it out here for free!
