In these current economic times it can seem a daunting prospect to be able to afford your very own home. But the first step in this process is to start saving for a deposit.
House prices have slowed in recent times but the trend is still upwards in most parts of the country (at least in the capital cities). In this environment it can seem like an uphill battle trying to save enough for a deposit. but it is achievable.
There are 4 steps you need to take in order to make saving for a house deposit easier:
Step #1 – Pay off any debt
The first thing you need to do is to pay off any bad debt you currently have. This will allow you to borrow more and will look better to the financial institution when you apply for the loan.
Not to mention allowing you to repay more on your mortgage once you have your new home.
Step #2 – Start saving
This may seem obvious but you would be surprised how many people procrastinate on this. Even if it is only $20 per week – start putting something away and you will be surprised how quickly it adds up.
Finding the money
Initially, you may think that you cannot save nearly as much as you need for a deposit, but if you have a hard look at your budget and the bills you pay each month, you may just find some significant savings.
Automate your savings
Once you have decide on how much you can save, set up an online high-interest saving account and set up an automatic deposit into that account from your main account. This is the secret to saving – automate it. You will never miss what you don’t see.
GoSaver
With Queenslanders Credit Union’s online GoSaver account you can transfer money automatically and hide this account so you won’t be tempted to spend it. Get serious about saving today!Step #3 – Have a target
Having a solid target will not only help you save but will guide you to know how much you will need to save. Aiming for a 20% deposit is a good idea as you will avoid paying any Lenders Mortgage Insurance (LMI), which the money lender will require you to pay if you don’t meet the 20% deposit minimum.
Step #4 – Know what you can afford
Whether you are aiming for 20% deposit or less, you need to know how much you will need to save. To arrive at this figure you will need to know what sort or property and the suburbs you can afford.
Start looking at websites like realestate.com.au to find out how much units, townhouses or houses cost in the suburbs you want to live. This will give you a good idea on what your home will likely cost.
Use this price to find what sort of deposit you will need. Assuming you are aiming for that 20% deposit and the average price of a house in your favourite suburb is around $400,000, you would need to save $80,000.
Remember to keep in mind all the costs involved with buying a property, like Stamp Duty (although this may be waived if you are a first home buyer), agent fees, and so on. Keep these in mind when saving.
Now you have a target amount in mind, you can start saving as hard as you can. You can easily work out how much you need to save using an online calculator. Plugging in the numbers you can easily see how long it will take you and how much you will need to put away to reach your goal.
If you find that it’s just not achievable, you can always look at a cheaper property (perhaps look in other suburbs) or settle on a lower deposit.
The key here is to be as realistic as possible.
Have you started saving for your deposit yet? How is it going?
Comments (6)
Melanie Monico:
May 08, 2023 at 03:46 PM
It’s important to do your research when you’re saving so you are both aware and have an estimated total of how much you need to save. Other expenses include solicitors fees, application fees so it is worth finding out how much these will be.
Russell Allert:
May 08, 2023 at 04:07 PM
Thanks for your reply, Melanie. It’s true you need to factor any additional costs associated with a home loan such as those you mentioned. (Please note that I have edited your comment as it contained a link which is in conflict to our terms and conditions). Cheers!
Russell Allert:
Nov 27, 2023 at 09:43 AM
Hi Michael We will consider taking a guarantor where the borrower has insufficient security & the guarantor can offer a mortgage over their own home to substitute for the full deposit. We don’t use a guarantor’s income to top-up the borrower’s ability to repay the loan – they must be able to make the repayments regardless of the guarantor. In cases where the borrower has insufficient income to cover repayments, it needs to be a joint loan with the person who would effectively be the guarantor listed as a party to the loan. I hope that helps. Please feel free to contact us for further information, by either calling us on 1800 753 377 or by visiting our website: http://www.queenslanders.com.au Cheers, Russ
Michael M:
Nov 26, 2023 at 09:06 PM
Is it worth looking into a guarantor loan?
Russell:
May 13, 2023 at 01:52 PM
Hi Ellen First up, it’s great you are starting to think about saving for your own home! Unfortunately, defaults do stay on your record for a number of years, and can impact your ability to get a loan with some financial institutions. However, it is good you are paying them off as this will look better on your credit report. We can only speak for ourselves, but we don’t automatically discount people because they have defaults on their credit report. We look at the overall circumstances and give you the opportunity to explain how the defaults came to be. I hope that helps alleviate your concerns. If you ever need to discuss your individual circumstances please contact us. Russ
Ellen:
May 12, 2023 at 09:54 PM
Id like to start saving for a deposit. Unfortunately I have a few defaults from a few bad decisions such as an electricity bill and old phone contract. Im in the process of paying these off, but im scared I will never qualify for a home loan after a bad run of defaults. I dont have any loans or credit cards or other debt so my cost of living is minimal… but how hard is it to get finance with bad credit and paid defaults??
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