Saving for your first home deposit can seem daunting. It is a big financial commitment, and you need to be disciplined when saving for your first home.
Offering affordability, stunning natural surroundings and numerous lifestyle benefits, house and land packages in Berwick are becoming an increasingly popular option for first-time buyers, making it easier to save up that deposit and live your dream life.
Do your research
When saving for a house deposit, you need to determine what type of home you want, the area you want to live in, and look into the property market to get an idea of property prices.
Once you know the approximate price of the type of property you like, you can then work out if it fits within your budget and how much you need for your home deposit. For first-time buyers, a house and land package in Berwick can be an affordable option for your dream home. Combining the purchase price of the land and house, a house and land package also makes the process of buying your first property much simpler.
Generally, it’s recommended you save at least 20 per cent for your home deposit. If you have less than 20 percent for your deposit, many lenders will still allow you to apply for a home loan, though there may be additional fees you need to consider, such as Lender’s mortgage insurance (LMI), which can add a significant amount on top of your loan.
Set a savings goal
A house is the biggest financial investment you are likely to make and it takes time to save up a deposit.
Once you know how much you need for your deposit, work out a savings budget. Establish how much you need to save each month to reach your target and stick to your savings plan.
You need to have realistic goals suited to your budget. Track your progress each month, and if required, make adjustments. You may have to set small savings goals to start with, and if your financial situation changes, you might be able to increase how much you save in the future.
Look for ways to save more
Once you have a savings goal in place, it’s a good idea to look for additional ways you may be able to boost your savings to reach your goal of buying your first home sooner.
Review your current expenses and look for any areas you could be saving more towards your dream home. This could include increasing your income, cutting back on expenses, and selling off unwanted or unused items in your home.
Set up a dedicated savings account
When saving for your house deposit, you may want to have a separate savings account dedicated specifically for your home deposit.
It is worth finding a savings account with good interest rates, as a high-interest savings account with minimal or no fees can ensure you maximise your savings. Streamline your house deposit savings with automatic payments. Setting up regular automatic transfers into this account allows you to save each month without any effort.
You want this account to be easily accessible when you need to pay your deposit, but not so easy that you can dip in and out of it at any time. Name it ‘house deposit’ to remind you of your goal and prevent the temptation to use it for anything else.
Pay off any debt
When saving for a house deposit, you want that to be your first priority. Paying off any existing debt will make it easier to save more for your future home.
Whether it’s credit cards or a car loan, your debts may be costing you a lot in terms of interest. Paying off debts as soon as possible will help reduce the total amount of interest you pay. If you have numerous debts, consider consolidating them to make it easier to pay them off.
When you apply for a loan, any debt you have will be assessed, which can also impact your home loan rates.
Regularly review your finances
Saving for a house deposit takes time and effort. It’s worthwhile tracking your progress and reviewing your finances on a regular basis.
Your financial situation can change throughout the year, whether you pay off your debt, get a promotion or a healthy tax refund. This means you may need to update your savings plan and increase your savings budget.
It’s also worth keeping an eye on the property market and any changes that may impact the deposit you require.
Save as though you already own your home
If you’re currently paying rent, consider saving the difference between your rent amount and what your mortgage amount would be each month. Look at the cost of your mortgage repayments to work out how it fits with your budget.
Saving as though you already own your home can help grow your savings, but will also show that you’ll be able to afford your mortgage.
Contact the team at Perch to find out more about house and land packages in Berwick.