September 29, 2014
- Know your numbers and do a budget. Determine what your monthly income and expenses are and write it all down – this might help to expose some areas where you can make some savings – any extras can go towards your deposit.
- Manage your credit card debt – this culprit can eat up a significant amount each month if you don’t clear the balance completely. Keep your card (make it just one and keep the limit low – that will also help your borrowing capacity) clear each month so you’re not paying unnecessary interest.
- Capture your savings online – determine a set amount and set up a transfer each week to your dedicated savings account – online saver accounts will pay you better interest too.
- Plan ahead – using a calculator such as this one from Mortgage Choice https://www.mortgagechoice.com.au/home-loans/calculators/achieve-savings-target-calculator.aspx you can work out how much you need to set aside to reach your target – a bit of reverse planning to speed up the process.
- Be tough about what you spend on food and drink – this doesn’t mean you eat badly – in fact if you cook at home and prepare your own lunches you’ll probably eat BETTER! And consider the fact that if you buy a $200 espresso machine, that’s only 2 months of $3.50 coffees before you’re in front.
- Sell stuff – do you have any unwanted possessions lying around – sell them off on Gumtree or eBay – it all adds to your savings. And best of all there’s less to move when you buy your first place!
- What luxuries can you do without – do you really need Foxtel? Do I really need that new handbag? Does the car have to be new – second-hand cars can offer great value.
- Be realistic about what you can save and when. If you have a 20% deposit you will avoid Lender’s Mortgage Insurance – click here for an explanation https://www.mortgagechoice.com.au/home-loans/first-home-buyers/lenders-mortgage-insurance.aspx. But that may take quite a while to save. So if you buy now, pay LMI (it can mostly be capitalised on top of your loan – on which you will pay interest) and your property appreciates in value then you might be in front. We can help you do the sums and see what might work in your situation?
- Make sure you document your savings – lenders view your genuine savings well but you need to be able to show that – keep your statements if they’re posted to you or save the soft copy – you’ll need it for your application.
- Talk to your mortgage broker regularly – we love to hear how you’re getting on with your savings and we can keep you up-to-date with any changes or developments in loans or credit policy – anything that might affect when you can embark on the purchasing process.