Saving for a home loan deposit whilst renting may seem out of reach, but (as the old saying goes) ‘where there’s a will, there’s a way’.
If you plan on saving a 20% deposit (Remember: the more you can pay upfront, the less you’ll have to borrow and the lower your future repayments will be) you’ll most likely need to save tens of thousands of dollars whilst managing your living expenses. To help you get the ball rolling, your North Sydney broker has pulled together some simple tips and tricks to help you boost your savings whilst still being able to enjoy the lifestyle you’ve come accustomed to.
You will need to assess your current financial situation and spending habits. Use bank statements and receipts to monitor your spending over an average month, make a note of regular expenditure i.e. rent, utility bills, groceries; then go into greater detail to see how much you spend on luxuries i.e. eating out, alcohol, takeaway, clothes…
ASIC have a pretty comprehensive budget planner that enables you to work out where your money is going, so why not give it a go?
Once you know where your money is going you can start to budget and make a plan for saving.
Start saving: You’ve set a goal so now you need to make sure your reach it. Here are some tips that you can use to stick to your new budget and boost savings for your new home:
• Buy and cook food in bulk… plan your meals and save $$$
• Skip your morning coffee from the pricey hipster place down the road… $4.50 x 365 = $1642.50 (if you NEED your daily hit why not try $1 coffee from 7Eleven)
• Save your coins – like a piggy bank for adults, you’ll find you have a substantial win after just a few months
• Put your tax refund straight into your savings account (it’s kind of like free money… sort of)
• Quit the gym and exercise outside for free! $65 x 12 = $780
• Maximise your savings by moving them into a high interest earnings account and reduce your temptation to spend
Take advantage: Some lenders will accept rental payments in lieu of genuine savings because your ability to pay rent on a fortnightly or monthly basis is reflective of your ability to meet your mortgage repayments.
Take advantage of this as it’s fair to say that when property prices are high, particularly in metro locations, you may well be paying more in rent than you would be in mortgage repayments on a typical loan amount. For this reason some lenders are willing to accept this form of genuine savings.
You will just need to show a rental ledger/tenancy agreement from a licenced real estate agent that shows you’ve been making your rental repayments in full and on time for a minimum of 3 months.
Seek advice: Finally, and perhaps most importantly, when you’re looking to save for a new home – make sure you’re getting good advice!
Here at Mortgage Choice, North Sydney we can take you through the opportunities which may be available to you, help you find a competitive interest rate and present a cost breakdown of the expected government fees for your loan amount.
• We’re here to answer all your questions and explain how the whole home buying, loan-getting process works – in simple language, not baffling finance jargon.
• You could be eligible for First Home Owners discounts and incentives. If so, we’ll let you know and get it all sorted for you.