Most first-time buyers find it difficult to purchase a home, and property prices continue to rise. According to CoreLogic, home prices will continue to climb through 2022, albeit at a slower rate than in 2021.
If you’re a first-time house buyer, don’t worry: here are some helpful hints for cutting costs, increasing savings, and getting your first home sooner!
1. Make a detailed budget
The first thing you should do is create a detailed budget that shows all of your financial accounts’ ins and outs.
Writing down your income in a spreadsheet and subtracting any expenses you have, such as rent, energy bills, other loan repayments, and direct debits, such as a Netflix account, is an easy way to do this. A better method is to get your bank statement online, record each transaction and spend in a spreadsheet, and then utilise the excel functionality to automatically add up what you have left over each month.
Whatever method you use, a smart budget will show you if you’re overspending or on schedule to meet your objectives.
2. Eliminate wasteful spending
After you’ve created a budget, go over each of your costs and see if there are any areas where you may save money. Consider the following scenarios:
- Do you really need four distinct streaming services? Remove one of Netflix, Stan, or Amazon Prime from your list of options.
- Look for any direct debits that aren’t necessary. How many monthly subscriptions do you have that you never use? If you never go to the gym, cancel some of your magazine subscriptions.
- Look for areas where you are overspending. Buying lunch five times a week might easily cost $50, but bringing your own lunch can cost half that, if not less. A cheap coffee machine, on the other hand, can cost less than $100, but you’ll spend hundreds more on coffee each day.
- Eliminate bad habits. Every year, smoking, gambling, or buying too much alcohol at the end of the week can cost hundreds, if not thousands, of dollars. If you’re having trouble quitting, try to spend less on these goods or get professional help.
3. Make several bank accounts
You can simply create and link numerous separate savings accounts, as well as set up automatic payments to move money to these accounts, thanks to the internet. Send $100 or $200 to each account with each paycheck and let the money accumulate, utilising your primary bank account for regular expenditures.
You should ideally be saving enough money each month to cover a prospective mortgage repayment; a lender will consider this as proof that you’re a conscientious saver with a good possibility of meeting your repayments.
4. Set goals for yourself and treat yourself when you reach them
It shouldn’t be a chore to save money. What’s the point of saving every dime if you never get to enjoy yourself? As long as you adhere to your goals, you should be able to go out with friends or get yourself that new TV you want every now and then.
If you establish a goal for yourself to save $5,000 in a few months, why not reward yourself when you attain it? As a reward for reaching your goals, take a brief vacation or rent a lovely hotel room, or buy those new clothes or games you’ve always wanted.
Just make sure these incentives aren’t too expensive, and that you track them in your budget spreadsheet.
5. Make sure your credit is flawless
Credit card debts and outstanding loans are not attractive to lenders, therefore you should try to clear them up before applying.
Pay down your bills first, whether through a balance transfer or consolidating debts into an existing loan. After that, work on raising your credit score by paying all of your payments on time and cancelling any superfluous credit cards you may have.
A lot of buy now, pay later (BNPL) usage in your bank statements is another thing lenders don’t like to see. If at all possible, avoid using these services and never fall behind on your payments.
6. Take the opportunity to find a second source of income.
Even in a dual-income home, making a deposit on a normal 9-5 schedule may be difficult. Instead than spending your nights watching television, consider starting a side business. Setting up a modest online business or selling your skills to others through sites like Airtasker are both viable options.
If you’re still having trouble saving, you may always lower your house expectations and hunt for a less expensive home, which may make it easier to save for a 20% deposit.
7. Use grants and schemes to your advantage.
In Australia, assistance is offered for first-time house buyers. The Australian First Home Owner Grants (FHOG), which were first presented in July 2000, are one such example. If first-time purchasers meet specific qualifications, such as those listed below, these incentives can provide about $10,000 to $20,000 in cash:
- Being over 18
- Never owning a property before
- They intend to live in the house for a continuous period of at least 6 months
- At least one applicant is a permanent resident or Australian citizen
Although these grants are unlikely to cover the entire cost of a deposit, they may provide the final push you need to purchase your dream house.
8. Find a great value home loan
You’ll need a solid home loan to go with your property because it’s arguably the biggest investment you’ll ever make. A difference of less than 1% p.a. on a home loan can add up to tens of thousands of dollars over the life of the loan, so make sure you select one that’s both affordable and offers a wide range of features.
Check out some of Homestar’s low-interest home loans – we have options for a wide spectrum of homebuyers!
Disclaimer: This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered Australian legal practitioner or financial or investment advisor.
