1. Review and manage your accounts and loans
This is one of the most important things that are overlooked by most borrowers. When applying for a loan, brokers and lenders will ask for your last 3 to 6 months statements for your loans, transaction accounts, savings accounts and credit cards. If your accounts are overdrawn, over the credit limit, or you have late payments, this can impact your loan application and you will need to explain why your accounts are not in order.
So make sure you always have enough cash in your accounts to cover your bills, pay your bills on time, and manage your spending. The below two points will help with this.
2. Budget
Budgeting allows you to create a spending plan for your money. It can enable you to have enough money for the things you need and the things that are important to you. Following a budget can help keep you out of debt as well as assisting you if you are currently in debt by keeping your finances on track.
By having a budget in place, you will be able to start your spending plan and track and control your spending patterns. It’s also a definite way of saving for your future home. You will become more conscious of your spending patterns and prioritise what you need to spend your money on, instead of what you want.
3. Separating your money
Separating your money into separate accounts and avoid using it can help towards saving for your deposit. For example, have a rental account for just paying your rent as well as a separate savings account with a competitive interest rate for your first home deposit. By putting aside $50 per week, you will end up having $2600 each year in your savings account!
4. Look for the most affordable home
Buying a home can be incredibly emotional. You may have your heart set on a property you’ve seen, but may not be affordable. When getting into the market, consider looking for a property that you can afford.
You may also need to look at different options such as the quality of the home as well as looking at a different location or a little out of the desired area. If this is the case, it still means you are stepping into the market and can look at purchasing a bigger or more ideal home later down the track.
5. Goals
Goal setting and planning is essential. Having a visual plan can get you into the right mindset to save for a deposit. Let’s be realistic- buying your first home may be a long-term goal. You may not be able to buy a property in 1 year, however, may take you a few years to save for a deposit.
6. Using a Guarantor
Some first home buyers can obtain some family support.
For example, your parents may be able to provide some money towards your deposit or act as a guarantor for a home loan.
A Family Guarantee (or Family Pledge) means your parents use the equity in their property or cash in a term deposit as additional security for your loan instead of giving cash. The home loan will be secured using both properties- your parents and the property you’re purchasing. Talking to us will be the best way to find out which lenders consider a guarantor and what requirements are needed.
For some more information on buying a property without a 20% deposit, check out our blog post here.
7. The perfect home
Is there such thing as the perfect home? Have a list of your needs and wants and be open minded for when a property comes along. With the property market moving quickly, searching a long time for that perfect home can be tiresome and costly as the market changes. However on the other hand, if the property doesn’t suit you, you will need to ask yourself that if you do settle on the property, are you buying for the sake of buying or is it a home that you want?
So, if you’re looking to purchase your first home, contact us about the process, see how much you can afford to borrow & let us be your guide through this journey.