“How Long Will It Take Me to Save for My First Home?”
“How can I buy my first home faster?” Adelaide mortgage broker Dom Cassisi talks about setting realistic expectations and workable plans as you save.
How long it takes to save
According to one analysis, first-time buyers need an average of 4 years to save up to a 10% deposit goal. They might need 8 years to reach 20%. Couples need about 3 years for a 10% deposit, and 5 years for 20%. It’s smart to shoot for a 20% deposit so as to avoid Lender’s Mortgage Insurance (LMI).
These statistics are highly variable, however. A lot depends on your personal income and where you’re looking to buy a home. Besides, prices these days are only going up and these figures don’t take into consideration the high fees associated with stamp duty and other legal matters.
It’s important to be reasonable in your expectations. There’s nothing wrong with being flexible and willing to settle for something a little less than your dream home. This way, you can at least start building up on your credit and interest as you continue to save.
Even though purchase prices are going up, it’s possible to cut your estimated saving time in half, if you’re smart about saving.
The following financial and practical tips will help you stay in the fast lane when it comes to saving for your first home.
Smart banking for faster saving
Not just any savings account is right for you. Interest rates and banking fees vary widely. As you save, you may even need to change accounts. The account you opened might not be so beneficial once you’ve got some serious cash squirreled away. A term deposit account may be best to help reduce the temptation to use the money unnecessarily.
Try setting up some auto-payments directly into savings from your checking account or paycheck. This way, you won’t forget to put away a specific amount each week or month.
When you’re finally ready to apply for a loan, remember to borrow only what you can afford to pay back. You don’t want to start out like in your new home with outrageous debt looming over your head.
Lastly, try getting pre-approved for a loan. This only happens under certain conditions, but it’s a good way to keep you on-track and under budget when shopping for a home.
Practical steps for saving for your first home
You could reach your goal of purchasing a home even sooner than you thought possible. Don’t let current statistics prevent you from setting reachable goals for smart saving. Incorporate these tips into your daily life to see how saving a little in many areas will add up:
– Work out a realistic budget that allows you to save systematically, not sporadically
– Make healthy changes by cutting back on snacks, nights out at the bar, and other vices!
– Cut out unnecessary credit cards and reduce credit spending
– Pay off debts and bills as soon as possible instead of letting them accumulate
– Increase your income by taking on extra shifts, a second job or asking for a pay rise
– If your circumstances allow, try rooming with family to save on living expenses
Your surest bet of saving up quickly is to consult the home loan experts, Funding Options. Contact us to schedule a meeting and start saving.
– Dom Cassisi, Managing Director