Bankwest First Time Buyer Deposit Report 2015 indicates that on an average, an Australian couple has to save for 4.2 years to accumulate the 20% deposit (based on the median home price) for their first home; the saving time being the highest for couples in NSW (5.3 years) and lowest for those in Tasmania (2.8 years).
While it is true you may have to save longer than previous years to afford your first house, falling property prices and lower mortgage rates in the year 2016 indicate it is time you purchase your coveted home.
Entering the property market is easier when you understand it well. HashChing brings to you 11 tips to possess your first home sooner:
- Plan before you purchase – Don’t jump the property bandwagon because everyone wants you to. Buying a house is a financial decision that will affect all aspects of your life. It is a good idea to plan the purchase before getting married or starting a family as increased costs translate into lower borrowing capacity for most banks.
- The big D – Saving a 20 per cent deposit, that prevents you from taking out lenders mortgage insurance costing several thousand dollars, is the toughest part for most property purchasers. However, if your heart is set on a property and you don’t have the requisite deposit, mortgage brokers at HashChing can get you home loans deals best suited to your requirements and financial position.
- Budget – Small, disciplined savings go a long way in building a respectable deposit. Set your financial goals and plan your savings effectively using our Savings Goal Calculator. HashChing offers you several online calculators that are easy to use and extremely handy for personal financial planning.
- Penny wise, pound wiser – Small steps such as cutting down on that daily Startbucks coffee, carrying home cooked lunch to office, having a garage sale of all your unwanted unused Christmas gifts can lead to large savings. Staying in your family house for as long as possible can also save you significant amount of money you’d be paying off as rent otherwise. Paying a board to your parents might be much more economical than paying rent outside.
- High interest savings account – When you are saving up for a deposit, it is a great idea to keep your money in high interest savings account usually requiring a fixed monthly deposit. Compare various accounts on the basis of rates and features such as bonus payments before choosing one. Also consider investment options such as fixed deposits (for safe returns) and equity markets (higher returns but market risk involved).
- Know what you can afford – Know your borrowing capacity before you decide to apply for a loan. Calculate your monthly and weekly repayments, preferably at a higher rate, to avoid defaults in the future. It is easy to think you can squeeze in extra repayments while banking on a future promotion, but it is most prudent to buy in your limits.
- Compare – As mortgage rates dip lower, it is time to move out of your comfort zone and check deals with various lenders before signing up for one. Visit HashChing to compare hundreds of pre-negotiated deals with lowest mortgage rates from the comfort of your screen.
- Loan Preapproval – Don’t forget to have your loan preapproved before starting the property hunt. Having a loan preapproval tells you exactly how much a lender is willing to lend to you and prevents disappointments later. You need to be ready with your proof of deposit, monthly expense sheet and proof income documents.
- Check your credit – A clean credit file is a prerequisite for every lender. Pay your bills (even the smallest ones) on time to avoid any black marks. It is also a good idea to give up on extra credit cards and clear as much debt as possible before applying for a loan. Remember, more debt on your file makes you a risky customer for the bank.
- New, existing, or off the plan – The type of house you decide to buy can affect your costs significantly. While existing homes may be more expensive to buy, they can be a safer bet than new homes that offer the advantages of State Grants and stamp duty concessions for first home buyers. Buying off the plan is another trend that is catching up, which means you pay now for a property that will be constructed in the future. Considered as a vehicle to cash in on rising property prices in the future, read here to learn about the risks in buying off the plan.
- Take help – Using a mortgage broker can make the process of financing your home much simpler. A mortgage broker can suggest mortgage deals that are best suited to your financial goals and condition. Save yourself the trouble by hiring the services of a licensed broker to purchase your dream hassle-free.
HashChing aims to simplify your home loans. Be it refinancing a loan or your first property purchase, you are bound to have many questions. Use our to check your borrowing capacity or to calculate your repayments.
By Vidhu Bajaj