Buying a house is exciting and life-changing; saving the deposit is a little less fun. But the more money you put down upfront, the less...
Here are some tips to help you save your deposit faster, so you can move into your own home sooner.
The property market is always changing. To get an idea of property prices in the area you want to buy:
When thinking about how much to save, check your loan to value ratio (LVR). This is calculated by dividing the amount of your home loan by the purchase price (or appraised value) of the property.
You should be aiming for a minimum deposit of 20%. Usually lender's mortgage insurance (LMI) is payable if your LVR is above 80%. This is a one-off insurance premium to protect the lender should you default on your home loan.
The easiest way to see where you can cut back is by doing a budget. Write down your essential costs, such as rent, bills and food, and subtract this amount from your income. What is left over is what you could potentially save for your deposit.
Once you know what is left over after all expenses, set up an automatic transfer into your savings / investment account. Automatic transfers allow you to 'set and forget', knowing that your savings are growing without you having to transfer them manually every time you get paid.
While it may not seem that appealing, many young people choose to move back into the family home while they are saving for their first house. Rent is likely to be one of your biggest expenses, so if you can cut this right down, you could increase your savings very quickly.
Source: Moneysmart Website
The information provided above is of a general nature. This does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.