You’re ready to make the move and fly the nest but the idea of saving for your first home seems as farfetched as landing a six-figure salary straight out of university. While there’s a lot of questionable advice that tells first home buyers to cut down on the holidays and avocado, there’s some truth to what they’re saying. Here are some tips to help you save for a new home.
Work out how much you need to save
It’s often recommended that you save a 20 per cent deposit to purchase a home, but it is possible to borrow more than 80 per cent of the home loan with Lenders Mortgage Insurance. To find out if you qualify to borrow more than 80 per cent you need to work out your budget and how much you want to pay for a house, as well as how much you’re allowed to borrow from the bank to cover the length of your mortgage. From there you’ll be able to calculate how much you actually need to save for a house.
Prepare a budget and stick to it
The easiest way to ensure you’re saving week on week is to prepare a realistic budget and stick to it. Deduct your necessary expenses from your income, including bills, petrol and groceries. Try and cut out or cut down expenses you can live without such as takeaway and entertainment. The remaining amount is what you should be able to save from your income each pay day. Many banks also allow you to nominate an amount each week, fortnight or month that is automatically transferred into another, higher interest savings account. This is a great tool to take advantage of, especially for those who struggle to avoid temptation when it comes to spending money as it forces you to save.
Reduce your debts
Increase your borrowing power and pay off any personal loans and credit card debts. Reducing these will significantly increase your borrowing power with the banks which means you may be able to rely on Lenders Mortgage Insurance and not need to save as much for your house deposit.
Analyse your budget
Record your expenses on a monthly basis to find further opportunities for saving. If you discover that you’re still living comfortably on the budget you designed for yourself when you first started saving, try and cut back on further expenses. For this to work effectively, you’ll need to write down everything you spend money on including meals out and commuting costs as these all add up over time. This also gives you the opportunity to shop around for new deals for things like phone bills and insurance providers.
Consider the additional costs
The house deposit is just one of the expenses you’ll need to save for when it comes to purchasing a property. There are also fees that will need to be covered such as the building inspection, pest inspection, solicitor and conveyancing fees, loan application and property valuation fees, just to name a few. Depending on your purchasing position and the state you’re purchasing in, you may also need to pay stamp duty. In addition, you’ll also need to consider moving costs such as furniture removal and cleaning your old property if you’re renting, as well as electricity, telephone and internet connection.
Now that you’ve saved up for your new home, it’s time to make the move. At Grace, we provide a comprehensive range of moving services to suit your needs. Make the move with Grace and get your free quote today.