Home Saving Tips: Tips for saving for your first home

Buying your first home is an exciting and life changing moment but just how much money will you need to secure that dream home? It may seem like a daunting task now, but once you are equipped with the skills to effectively save and budget you’ll be in your first home in no time.

By following a few key tips you can get your saving well underway:

• Know the numbers

You can more successfully follow your savings strategy if you set a savings target. The greatest place to start is with a deposit that is frequently desired: 20% of the cost of the property. This will guarantee that you can obtain a loan without having to pay lenders mortgage insurance (LMI), which can be expensive. Basically, the more money you have saved for a depsoit, the less money you will need to borrow, and as a result, the smaller your monthly repayments will be. You will also be able to pay off your loan sooner. A substantial deposit also demonstrates to the lender your capacity for saving. This is crucial because they will be the ones to approve your loan application.

Consider fees and other expenses as well. When you are concentrating on the deposit, it is simple to forget about the other expenses related to purchasing your first home. Just a few of the expenses one might anticipate when purchasing a home include stamp duty, registration fees, conveyancing and legal fees, and building inspections.

Identifying your spending habits is also a vital part of this step. By creating and examining your habits or budget, it will enable you to see where you can save, after all, small changes can have a big impact! Ultimately the choice is yours as to what you’re prepared to give up to make your dream a reality, but simple things such as thrift shopping/bargain hunting instead of buying new, selling your unwanted/used items, hiring or borrowing clothes, sticking to a shopping list (or stocking up when things are on sale) or going our for dinner once a week instead of twice can add up quickly.

• Getting help and helping yourself

Although it won’t be applicable to everyone, it’s worth investigating your eligibility for the First Home Owners Grant. In South Australia, if you are buying or building a new home, that will be your principal place of residence, then you may be eligible for a grant of up to $15,000. In saying this, there are some particular requirements you have to fulfill including; the home has not been previously occupied, has a market value of less than $575,000 and the applicant/s are 18 years of age or older, among other requirements.

If this isn’t applicable to you don’t be disheartened there are other options out there including the First Home Super Saver Scheme. To put it simply, this scheme allows you to save money for your first home inside your super fund. This is applicable to those who are first home buyers and both of the following apply:

• You will occupy the premises you buy or intend to as soon as practicable
• You intend to occupy the property for at least 6 months within the first 12 months you own it, after it is practical to move in

Be sure to talk to your bank to discuss all your options and see if you can be eligible.

It is also vital here that you help yourself to make your savings journey as easy as possible. This could include ensuring you automate your savings into a separate account, the ‘set and forget’ method ensures your savings are growing without the hassle of setting funds aside manually. A separate savings account will enable you to investigate high-interest options to make your money work harder for you. This also ensures you become accustomed to your available ‘spending’ money and avoids spending your savings. Once you have a sizable sum saved, you could also investigate a term deposit. This means it’s also time to take care of any other unpaid debts.

• Put your savings first

With your end goal being that house deposit, it is going to be a big commitment that may almost seem out of reach. Understanding your weekly/fortnightly income and the expenses you have will allow you to save each week whilst still being able to live life. Setting small goals along the way will not only keep you on track and motivated with your savings but will also allow you to enjoy celebrating throughout the process. Something as small as a monthly goal will show you are achieving your focus on saving, whilst still having the bigger picture in mind.

If buying a home is your top priority, then your savings should be top of mind. As we mentioned earlier, making regular, automatic payments removes the thinking and doesn’t give you a chance to spend it. This will also do wonders for your image with any potential lender as you’ll be able to show them proof you your consistency with your savings. If your starting to save a few years early and your comfortable with some level of risk, it could be worth considering an investment to boost your savings.

To summarise, in order to save for your home deposit, you need to be clear about how much you need to save and pair this with a budget to identify how you can save even more. Help is out there, check your availability for the available Grants and Schemes in your State and put your savings first. Saving for your first home might be a daunting experience, but it comes with great reward. Making a few small changes in the short term can allow you to watch those savings grow.