We all know the song - ‘Give me a home among the gumtrees with lots of plum trees…’ The great Australian dream of owning a home has been part of our country’s identity for centuries. Of course, it was a much more affordable dream back then!
Saving money in today’s inflated world is no easy feat. Often daunting and oh so tedious, it’s understandable that young people feel overwhelmed by the thought of saving to buy their first home.
However, we are here to tell you it’s not impossible! Just like anything, making a habit of saving by regularly doing it will help you stay on the right financial track and reduce the overwhelm.
Your dreams are important to us and we want to make them come true. So here are 5 sustainable and realistic tips you can use to achieve your goals of buying your first home.
Assessing and understanding your financial status is vital to setting yourself achievable saving goals. In doing this, it is important that you have a solid understanding of the basics - like your net worth, your debts, interest rates and monthly expenses.
Don’t let the jargon put you off. Finances seem like an intimidating area, however, with a little research and education, they really aren’t that scary! The best thing to do would be to speak to someone with knowledge in the field and start improving your financial literacy.
Once you understand what you are looking at, it’s time to start making records of your spending.
Sit down with your bank statements and start the month with a certain amount of money both in your wallet and your bank account. At the end of the month, take note of everything you spent money on - each payment you made - and how much money you have left over. Completely go through your finances and analyse your spending. Note where your money is going and what you can cut back on.
It’s also a good idea to list all major repayments that come up regularly. For example, car registration, health insurance, electricity bills etc. Make note of when they are due and add up how much you need to put aside for these.
Based on all this information, set yourself a reasonable and realistic monthly budget. This should include a portion of your income going into a savings account each time you get paid.
Once you’ve decided an amount you can comfortably live off, based on your income and spendings, decide a reasonable goal for your deposit - then break it down. If you say you want a deposit of $40,000 it is going to seem an impossible ask. But if you set incremental, bite-sized goals, it can be done.
Do this by setting monthly, biannually and yearly goals. As a first home owner it may be to put $1000 into your savings each month, pay off your debts within a year etc.
As a first home buyer you’re currently exempt from stamp duty, but you need to remember you still need to put money aside for things like solicitors fees and pest and building inspections.
Something else that is very important when considering your budget and goals, is that the deposit is not the only thing you need to consider. You also need to think about repayments - how much can you afford to pay each fortnight? What kind of lifestyle do you want? Use your budget to decide on the maximum amount you can afford to pay so you don’t find yourself overstretched later on.
Debt can sometimes affect how much someone is willing to lend you. It will be a big load off your chest if you can rid yourself of this before taking on a mortgage.
Once it is paid off you are already used to not having that money. Try and put that money towards savings if you can.
While this is definitely not essential, if your debt is under control, it will be a big help in the long run!
Taking out your first home loan is a daunting step into adulthood, but it can also be really exciting! Finding an institution you can trust is a huge part of this process. Here at Central West Finance Solutions we have credentials with numerous lenders via our aggregator Connective so we are able to source you a loan from a lender you know and trust.
Are you ready to buy your first home? Get in touch today and we can help you get started on the process.