If you want to break into the property market, we need to break it to you – saving for that elusive house deposit will require sacrifices.
Whether you’re saving for a 5% deposit or aiming for 20% to avoid Lender’s Mortgage Insurance (LMI), your first step is to work out the deposit you want to save and when you want to achieve it.
Here are our top tips on how to budget to save for your first home:
Count the cost
With the average Australian aiming to save $67,000 for a house deposit, most first home buyers will need to reprioritise their variable spending in order to save the maximum amount.
Paying less on your utility bills is a good place to start. According to recent data, Australians are paying up to $49.11 on average each week just for their electricity and gas.
Take advantage of energy comparison websites that are designed to help consumers save on usage by switching to a supplier with a more competitive rate.
Tip: In Victoria, you can claim $50 simply by comparing energy providers with the Victorian Government’s $50 Power Saving Bonus, which is available until June 30 this year.
Take note of your direct debits
Have you ever browsed your bank statement and raised an eyebrow at your excessive direct debits?
Streaming services such as Disney+, Netflix, Stan and Spotify or using buy-now-pay-later services such as AfterPay are payments that seemingly won’t break the bank. But add them together and regular discretionary expenses could equal hundreds of dollars better put towards your deposit.
Cutting out some of your lifestyle extras can also be advantageous when it comes to applying for your home loan, as many lenders have become conscious of borrower spending patterns when reviewing loan applications.
Downsize for your deposit
When analysing your budget, it’s likely that accommodation or rent is a large portion of your expenditure.
Consider whether you’re able to downsize your accommodation, move to a different location or even rent out a room for some serious savings. Paying $166 less per month can result in an additional $2,000 saved per year.
Once you’ve created your budget to save for your first home, speak to one of our qualified mortgage brokers about your financial position. MY EXPERT has a panel of brokers who specialise in helping first home buyers get into the market as soon as possible.
Brett Wadelton is a credit representative 398866 of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237).