Saving a deposit for your first home can feel a little overwhelming if you’ve not been used to stashing away money on a regular basis for a car/holiday/spa day/surf board/bond money/rainy day.
Never fear! We’re here to help.
No, we can’t give you the winning Lotto numbers, but our Step One Savings Plan will help you set some realistic savings goals so that you can get into your own home faster.
Trust us. It’s not about having loads more cash coming in, it’s about limiting what goes out. Make some simple changes to what you spend each week and you’ll be surprised at how quickly your deposit will start growing.
Instead of booking a table at that trendy new restaurant, maybe rustle up something tasty for a date night at home? Then take the leftovers to work the next day instead of heading to the deli at lunchtime? Maybe skip that daily ‘caramel latte to go’ and put the kettle on when you get to the office? Or say Namaste to the yoga studio for now and join a YouTube class. Small changes, but they can all add up.
Here’s a handy tip: Write down what you currently pay in board or rent each month.
Next, ask your Step One advisor to estimate how much you might have to pay each month if you had a home loan and then write that figure down. Work out the difference between the two amounts and vow to put that extra into your savings account every month. It’s a win-win! Not only are you tipping more money into your savings, you’re also demonstrating to a prospective lender that you are a super saver.
A wise word about Lenders Mortgage Insurance …
If you can put together a deposit of 20% or more, you won’t have to pay Lenders Mortgage Insurance (you’ll often hear it referred to as LMI). Avoiding LMI is a good thing if you can, but it’s no biggie if you can’t. Paying LMI is what most first-timers have to do when they’re purchasing their first home, so let the bank bundle the one-off fee into your home loan, give yourself a big pat on the back and be super-proud of the fact that you’re buying your own home.