Many Australian would-be first-time buyers have the income to afford mortgage repayments, but are not able to save a deposit. Saving for the deposit on your first home purchase can seem like a daunting task. Here are a few tips to help you meet this challenge head-on.
Determine your savings target. Work out what size mortgage can you afford, and from that you can identify the purchase price range and the deposit requirements. You will need a minimum of 5% of the estimated purchase price which will meet most lender’s requirements. You need to remember that you will need to save a little more than this to cover expenses such as stamp duty and conveyancing costs. If you don’t meet standard lending criteria, you may need to save more than a 5% deposit – it is a good idea to consult your real estate agent for advice.
Once you have a savings target – create a savings plan. How much do you need to save every month and for how many months? For example, if you want to buy a property for $500,000, you will need to save a $25,000 deposit. To do this over four years you would need to save roughly $500 a month.
Use a separate savings account for this purpose – having the savings in a separate account from the one that you access on a day-to-day basis will lessen any temptation to use the money for other purposes.
If you are a first home buyer and you open a first home saver account. In addition to this, the interest on savings will attract a lower tax rate. However, you can only withdraw the funds to purchase a home. If you open a first home saver account then you are committed to buying a home!
You may also be eligible for the First Home Owners Grant, A Builders Grant (if applicable in your state) or a stamp duty exemption (if available in your state). These benefits are made available when you buy a home, however, if you are aware of them now, you can work out the deposit you will need to save. To find out if you are eligible for any of these benefits simply call your state’s first home buyer hotline.
YNM Real Estate
☎ 1300 588 855