Quick Effective Tips to Save a Deposit to Purchase Your First Property – It’s Not That Hard!
Saving a Deposit to Purchase Property – I Want To Enter The Property Market!
Buying a home or a property may imply a deposit. You may come across home loans that require no deposit at all, but their approval criteria are known to be tough.
Therefore, you are left with only one thing to do – namely, to save a deposit so that you will be able to purchase a home or a property.
Keep in mind that saving for a deposit can take years. You shouldn’t quit after several months if you really want to purchase that property – just embrace financial discipline and start building up your deposit.
Your Deposit Size
Obviously, before you start saving a deposit, you must know how much you should save – or when you should stop saving. Property usually comes with a deposit 0f 20% of the total price.
Some lenders may accept deposits as low as 10% or 5% as well. However, a smaller deposit means that you will have to borrow more money and pay more interest. On top of that, a deposit lower than 20% may require you to pay LMI – Lenders Mortgage Insurance.
For example, a property valued at $500,000 will require you to save a deposit of $100,000 (20%). If you find a lender that accepts a deposit of 10%, you’ll need to save only $50,000 – but the possible LMI and other costs such as stamp duty could bring this sum quite close to $100,000 – get in touch with our office who will be more than happy to answer questions and workshop scenarios with you.
Serious Saving Is a Must
Naturally, it doesn’t matter what percentage of the property’s price you have to save as deposit. It all boils down to how serious you are about saving money for purchasing a property.
Here is what you should do to optimise saving:
Examine Your Spending
Know exactly how much you spend each month and see whether you could cut some things off or not. Use an app or a written record for this.
Setting a Budget
It is recommended that you set a specific budget for every month’s spending; naturally, this budget should allow you to efficiently save a deposit.
Pay Off Urgent Debts
Obviously, you should get your debt under control as soon as possible as it will affect your saving power. Take care of high-interest debt first.
To maximise your savings, you could also put a part of them in a term deposit or build your property deposit with a high-interest savings account.
Can I Get Deposit Help – What Are My Options
Naturally, spending money and saving less may not always help you as much as you need. You may need the help of other entities or people in order to build up a deposit.
Clearly, the most common deposit help that you can get implies asking your family for help.
Your parents may agree to guarantee for a part of your deposit, thus avoiding LMI and giving you the opportunity to purchase property without a deposit at all!
Your parents or relatives can also provide you with a cash gift to empower your deposit. However, keep in mind that there are some rules that you have to respect when relying on this way of deposit help.
Living with Your Parents
There’s not too much to say about this; just imagine saving a deposit without having to worry about rent every month!
First Homeowner Grant
Depending on the state that you live in, you may be eligible for a cash grant for first time home buyers. Obviously, you can use this grant to build up your deposit.
The Bottom Line
Saving a deposit can be quite hard – but remember that this is the first step towards purchasing and then living in your dream home. In short, you should start saving.
But, on top of that, make sure to look into the things that can help you with your deposit as well. If you have any questions or just need more information about deposits, home loans, and so on, feel free to get in touch with us.
We will answer your questions and, if need be, guide you through the process of finding the best possible lender for your needs. Contact us today – we are more than glad to help you! Contact us on on 02 9121 6247 or submit your scenario online.
So, why use Highline Lending for your home loan?
We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position
We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks
With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution