Buying a home is the great Australian dream. For most Australians, it takes years to save enough money for a home deposit, and that’s why it’s important to start as soon as possible. Here are 4 simple ways to better manage your money and afford a home deposit faster.
Tip 1: Make sacrifices
To afford your dream home, you’ll probably have to alter your spending habits. Take a look at your recent expenses and determine what luxuries or non-essential items you can live without. Even cutting down the smallest expenses (like store-bought coffees, dining out or recreation activities) can have a long-term effect on your savings.
You might also want to consider increasing your hours at work or picking up a casual job to earn some extra income, or moving in with a friend or family member to save money on rent.
Tip 2: Set financial goals
To make the savings process easier, set yourself some clear and realistic financial goals. The most common target when saving for a house deposit is 20% of the total property price, as borrowing more than 80% of the property price may lead to you paying lenders’ mortgage insurance (LMI).
A good tip is to begin living as though you already have mortgage repayments to pay, and then get used to living on that budget. Use our online calculators to work out your potential borrowing power, how much your home repayments will be and how much deposit you’ll need. Then work out a budget that will help you afford to buy your home.
Tip 3: Be practical about what you can afford
It’s easy to get carried away when buying your first home. Everybody wants their first home to be their dream home, but for most people, the first property they buy will be less than perfect.