First home buyers have it tough these days. Your first hurdle is to save a deposit – which can seem like an insurmountable task. The second hurdle is to actually beat the competition to buy the property.
So let’s break this down and look at these two hurdles:
Saving your deposit
The obvious way to get your deposit faster is simple – save more, spend less. While this sounds overly simplistic, here’s a couple of tips on how to do this:
- Know your budget – figure out where your money is going – like exactly where every cent is going. Find any “leaks” and stop them. Find any excesses and decide whether you really need them or if you can cut them back. When you figure out how much you actually need every month, put that amount only into your savings account. The rest goes into savings.
- Manage your debt – get rid of credit card debt, and if you can’t manage it all straight away, transfer balance to an interest free card until you can or consolidate all your debt into the cheapest loan you can get. And then take your credit card out of your wallet and keep it somewhere safe and out of the way of temptation.
- Optimise your banking – are you being paid daily interest on your balance? Do you have too many accounts that you are paying fees on? It’s worth a visit to your local branch to see if they have any better options for you.
- Once you’re getting a decent balance, ask your bank for options on the type of account that will earn the highest interest. Putting your savings into a term deposit means that you can’t touch the money easily and you’re earning more interest. If you’re not mentally ready to lock your money away, there are other options.
- Live somewhere cheaper. Is it an option to live at home for a while? Or to rent a granny flat or room in someone else’s home? Or even house-sit? Saving for a deposit while paying a large rent is difficult for anyone to manage.
- Ask your parents/grandparents for help. If your parents or grandparents are in a position to help, and they can see that you’re making a concerted effort to save, it’s worth asking the question if they could lend you some money to bolster your savings. Just make sure you pay them back!
Saving a deposit is a big thing – especially in today’s market, but once you’re in the market – either as a home owner or property investor, then the pressure should alleviate a little when you’re only having to pay off the mortgage rather than paying rent plus saving.
Beating the competition to buy a property
The trap that you can fall into here is desperation – and that’s not a good place to be in. The key is to keep your head and do your research.
You need to know your target neighbourhood inside and out. Know what’s for sale, know the sale prices, go to open houses, get to know the agents.
Let them know you’re a serious yet savvy buyer. Make solid offers based on recent comparable sales.
Don’t get caught up bidding at auction. Do your best calculation to figure out what a property is worth and set your limit. If you’re not confident bidding at auction, find someone to do it for you.
Keep your focus.
You will get there! Good luck and get in touch if you’d like to discuss your borrowing capacity or to arrange pre-approval.