How to save for a house deposit, what you need to do to save money and why you should consider building your dream home
The thought of saving for your first home deposit can be a scary and daunting prospect. If you are looking around the Newcastle area, the median price for a 2 bedroom unit is $733,000 which would require you to have a deposit of around $146,600 to avoid lenders mortgage insurance, and this would all depend on the financial institution that you choose to borrow the funds from.
With the current real estate market, now could be the best time to secure your first home.
Here are our top tips on saving, for first property;
Be smart with your money
What does ‘be smart’ with your money mean? It can be taken in many ways, but we just mean – think before you spend. Do you really need that item, or can you wait a little longer? Spend some time defining what is a want, and what is a need – try and apply that thinking to all purchases.
Set up direct deposit
Create direct debits into your saving account direct from your wage, each week or month. This way the money has already left your account and cannot be spent. the ‘out of sight, out of mind’ saying can really apply here. It can be especially helpful to have a savings account that is not linked to internet banking, and that you do not have a debit card for. Having to go into your branch to withdraw money can slow down impulse buying.
Upgrades aren’t always necessary
We live in a society that just upgrades items when the latest models are released, whether that be the latest phone, car, or fashion choice. If there is nothing wrong with the item you are currently using, do you really need to waste money on an upgrade right now? This is where practicing the ‘want or need’ analysis can help.
Sell things you no longer need or want
Do you have items that you no longer need that are in a sellable condition? If the answer is yes, then what are you waiting for! Advertising on your local buy swap sell page will mean you can sell your items without paying any commission or selling fees to a third party. Spend a few months collecting all your unused items and plan a garage sale to really give your savings a jump start.
Be thrifty with your shopping
Are there cheaper options when it comes to food shopping? Changing supermarkets can really lower the cost of everyday essential items. Do some research and find out the weekly specials, then shop them. All of this information is available online now, so it’s easier than ever to find out where to save some extra bucks! Cooking at home more and ‘meal prepping’ can also help to save extra money and take advantage of specials. When refueling the car, check out the prices at your local service stations and fill up accordingly. You can compare fuel prices in your region here.
Gain a second income
Are you able to pick up a second job, or do you have a talent just waiting to jump out and earn you some extra money? This is a really great way to start earning a second income whilst doing things you already enjoy.
Move to Save
Are you currently paying too much rent where you are living, is there an option to pay less for a similar style home around the corner? Saving more on the rent for the short term can really help bump up your savings pot for that future purchase.
Buying land only
Speak to your financial advisor or mortgage broker but consider the option of purchasing only land for now. You would require a smaller deposit and you would be paying off the land whilst still saving for your home building deposit.
Have a budget
Spend some time making a budget. be realistic and honest – working out the ins and outs can really help you get a better understanding of where your money is going. You will be able to cut down on unnecessary expenses and decide what is important to you. Make sure you leave a small amount for entertainment and miscellaneous expenses – you will have these anyway, and it’s better to budget for them!
Live with parents
This may not appeal to individuals who already have a family established and will require more room or may simply not be an option for everyone. If you are single or a couple who have that option, moving back in with the parents or other family is a great way of saving that deposit much faster.
Review current finances
Look into what you are currently saving. Can you find a better interest rate? This will help increase your savings without an extra effort on your part. Here is a great site for comparing different bank account options, and with plenty of useful financial calculators to help you on your way.
Check for any Government Assistance
If you are a first home buyer, visit this website to find out more information on the different schemes and grants that could be available to you. These could be worth thousands of dollars, so it’s really important to check out what your entitlements are.
Arnold Property are a local based real estate agency in Newcastle, so whether you are looking for your first home, forever home, or an investment property they will be happy to assist.
Contact us today 02 4969 2600 to chat to one of our sales team members.
Disclaimer: This information is general in nature and is not financial advice.