05 Feb Saving up to buy your first house – how will you do it?
Saving up to buy your first house – how will you do it?
Buying a house in Australia today can be massively expensive. Only a few people have the cash to pay an entire deposit right away. So how do they buy?
For many Australians today, especially those on the younger side, having the means to buy a house all by themselves is simply unrealistic. While many people would love to throw down $100,000 in cash for a deposit on a nice place, they simply don’t have that kind of money and possibly never will. So, what can be done?
Being financially beholden to a friend or family member who’s helping to finance your purchase is always a dicey plan, but increasingly, Australians are realising they have no other option. According to the latest numbers, saving up for and buying a place by oneself is starting to look like a thing of the past.
Independent savers are now a minority
Survey data collected by New Galaxy found that only 39 per cent of Australian’s today are saving for homes solely by setting aside a portion of their income. While many are now relying on other strategies, like pooling funds with a partner (25 per cent) or getting an inheritance from parents or family (24 per cent).
Joanna Pretty of Lender State Custodians told News.com.au that while there used to be a mentality of “don’t mix friendship and money” that people tried to adhere to, it’s no longer feasible for most people to follow that rule. In today’s economy friends and relatives have become essential resources for many as they save for deposits and home loan interest rates.
Whilst we can give you a hundred tips on how to save a dollar here or there, we realise there is no point discussing the savings if you don’t have an overall plan or goal. It is important to understand exactly what you are looking to achieve and what are the numbers to help you get there. This will ensure you have direction and are less likely to waste money on the little things.
How can you buck that trend?
Getting help from others is certainly becoming increasingly popular today, but how can you rebel against that paradigm and afford your own home? The Australian Securities and Investments Commission recommends starting by bringing back your personal budget down to the essentials. Consider how much you need for basics like rent, bills and food, then try to cut back on the extras beyond that.
From there, it might be suitable to invest your savings and collect a little bit of extra cash for your mortgage repayments. This can be a good idea, depending on how soon you will need the money. Shares and managed funds are better investments if you’re going to stick with them for a longer time period of five years or more; otherwise, you might be better off with a simple high-interest savings account.
We have created a list of our favourite – ‘deposit helping’ products that may help bump up your savings.
- Acorns – Invest your spare change
- High interest saving accounts –
Our favourite include ME BANK – High Fat Saver & ING – Savings Maximiser
- Budget Wiz – Track your expenses available from the app & Play store
- Money Box – not even kidding, get a money box and save all your $5 notes… will surprise you how quickly it will add up.
Whilst we advocate these products, we also suggest you do your own research, check the T&C’s and make sure the product is right for you.
Want to have a chat?
Saving for and purchasing a new home can be complicated! If you are looking for more hints and tips, or want to understand how you can get into the property market, register your details here and one of our award winning Finance Brokers will contact you!