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Smart Saving Strategies for First Home Buyers

Buying a house is a financial goal for many Australians. Homeownership is a smart choice for your family and future and acts as a fantastic investment opportunity. With careful planning and decision-making, your dream of owning a home could be a reality sooner than you expect, even during a cost of living crisis.

Dennis Family House and Land Packages

At Dennis Family Homes, we simplify the journey to your dream home with our stress-free house and land packages. Covering the expanse from north-west to south-east Victoria, our offerings cater to diverse budgets and lifestyles. From selection to construction, we handle it all, ensuring a seamless experience tailored to you. It’s an all-inclusive option that saves time and worry when purchasing your first home.

Browse our range of house and land packages on our website.

Start with a Savings Goal

According to the Director and Senior Mortgage Broker at Mortgage Domayne, Mark Polatkesen, your journey to homeownership begins with setting a clear savings goal and a realistic plan to achieve it. It’s crucial to have an understanding of how much money you need to save to secure a mortgage. Research the price range of homes in the suburbs you’d like to invest in to gain an understanding of the deposit requirements set by lenders in that area.

Browse Government Schemes

According to Mark, researching all available Government schemes can be beneficial. These schemes can include the First Home Owners Grant, Victorian Homebuyer Fund and the First Home Guarantee, both of which aim to assist first-time buyers in entering the property market.

Understand Your Borrowing Power

One common misconception among first-home buyers is that the amount you can borrow is the same as what you can afford. “What you can borrow and what you can afford aren’t always the same figure,” says Mark. “You will find borrowing power can vary from bank to bank.” It’s important to consider not just what you can borrow, but also what you can comfortably afford to repay each month. This involves assessing your income, expenses, and lifestyle to determine a realistic budget for mortgage repayments.

Look Beyond the Interest Rate

While securing a competitive interest rate is important, it’s not the only factor to consider when choosing a home loan. Long-term financial goals should also play a significant role in your decision-making process. Be sure to evaluate the features and benefits of different loan products, such as the ability to make extra repayments, access offset or redraw facilities, and flexibility in loan terms. All variable home loans feature an offset account – an essential tool for lowering your interest payments. Any funds in your account will offset your home loan balance and reduce the interest you pay. Ensure your monthly salary is paid directly into your offset account.

A mortgage that aligns with your financial objectives and offers suitable features can provide greater value over time than simply opting for the cheapest rate.

Buy Within Your Means

When it comes to purchasing your first home, it’s essential to buy within your means. While it may be tempting to stretch your budget to purchase a larger or more luxurious property, it’s important to be realistic about what you can afford. “Your first home should serve as a stepping stone into the property market, allowing you to build equity and leverage it for future investments,” says Mark.

Focus on finding a property that meets your needs and fits comfortably within your budget, rather than overextending yourself financially. Purchasing your first home requires careful planning, discipline, and a clear understanding of your financial situation. By setting realistic savings goals, understanding your borrowing power, managing living expenses, and choosing the right home loan, you can achieve your dream of homeownership sooner than you think.

With an ongoing focus on interest rates, now could be the perfect time to make some clever and practical changes to your finances and learn how to prepare for any further fluctuations with our helpful tips.

Assess your overall budget

Now is an ideal time to look at your finances and take stock of your expenses. Creating a written copy of your spending habits to keep track of and highlight any behaviours can be a great way to note any negative patterns. Assess your current weekly or monthly costs and note the areas you can limit spending.

Manage your debts

Getting on top of existing debts can go a long way to helping you manage your home loan. Your financial advisor could help you review and consolidate debts such as personal loans, car loans, credit cards, or bills, into your home loan or a separate personal loan, which could save you money. This method translates to one repayment per month, reducing interest rates.

Home loan interest rates are generally lower than other account interest rates, so by consolidating debts into one repayment, you could immediately begin to save. Always seek advice from a financial advisor before making any decisions.

Factor in Additional Living Expenses

When calculating your borrowing power, don’t forget to account for your living expenses. Small recurring costs, such as subscriptions, memberships, and dining out, can add up and impact your ability to afford a mortgage.

Mark recommends identifying small costs you can live without. Identifying areas where you can cut back or live more frugally can help boost your savings and improve your financial position.

Save on Your Power Bill

There are many ways to save on your power bill and significantly reduce your outgoing expenses, particularly during high consumption periods. Solar panels reduce your home’s reliance on traditional energy, lowering your power bills over time. While the initial costs are high, the long-term savings make it worthwhile. Many devices continue to draw power even in standby mode, so turning them off at the switch can make a big difference.

Consider layering your clothing and using blankets to keep warm rather than switching on the heater during colder months.

Meal Plan and Prep

Dining out and purchasing food can be an expensive habit. Sticking to a strict food budget can help you manage your expenses more efficiently. By planning meals, you can buy only what you need and reduce food waste. Setting clear spending limits ensures you avoid overspending on groceries.

Consider Shared Accommodation

If you have extra space in your current home, renting out a room could be a smart way to generate additional income. Sharing accommodation reduces your financial burden and fosters a sense of community, particularly for anyone new to the area. Before leasing a room or space in your home, establish clear guidelines and expectations with your incoming housemate to ensure a harmonious environment.

Invest In A Coffee Machine

Invest in a coffee machine for a cost-effective alternative to purchasing a takeaway coffee every day. While a takeaway coffee may cost around $6 on average, these expenses can add up over time, especially for daily coffee drinkers. While the initial cost of a coffee machine may seem expensive, it can save you money in the long run. Additionally, you control the whole process and can customise your drink to your taste.

Reach Out To Your Bank for Deals

Many banks offer various deals and promotions to attract and retain customers. These deals may include discounted fees, bonus interest rates on savings accounts, cashback rewards, or incentives for opening new accounts or signing up for specific services.

It’s essential to keep an eye on the offers available from your bank and take advantage of those that align with your financial goals and needs. Always read the terms and conditions carefully to understand any associated fees, requirements, or limitations before committing to any banking deal.

Discuss your home lending options with your bank and ask them about available deals and rates.

Automate Your Monthly Savings

Take advantage of electronic banking perks by automating your savings each month. Set up automatic transfers from your salary account to your savings account each pay cycle. This ensures that you’re consistently saving without having to lift a finger.

Sell Your Unused Items

Declutter your home and determine which items you no longer need or use. Then, sell the items online through any of the popular resale sites available to use for free. Use the savings to boost your savings account.

Plan Affordable Holidays

Saving for a home does not have to mean going without. You can still enjoy a budget-friendly holiday. Instead of expensive overseas trips, choose to enjoy your town or city for a domestic getaway.

Use Public or Alternative Transport

Cars can drain your savings through insurance, maintenance, and repairs. Use public transport, carpool, or cycle instead of driving to work. Make the most of any flexible work opportunities your company has to save the additional fees.

Buy Second-Hand

Purchase pre-loved furniture, appliances, and clothing from thrift stores, online resale websites and apps, or garage sales instead of buying brand new. Second-hand clothing is friendly to your wallet and the environment as it saves perfectly good pieces from ending up in landfills.

Shop Around for Better Bills

Contact your utility providers for better deals on water, gas, internet, and power saving. Negotiate a new deal to lower your monthly bills or consider the extras you need and then reduce your plan.

Save Any Additional Money

If tax time is approaching and a refund is on the horizon, don’t spend it. Instead, put any bonus or unexpected money you may receive straight into your savings. Resist the temptation to spend the surprise cash and put it towards your house savings.

Stay Motivated and Focused

Saving for a home deposit is a long process that requires consistency and discipline. It’s important to keep yourself motivated and focused. Celebrate small milestones along the way, pay attention to the mortgage rates 2024 forecast, but don’t be afraid to treat yourself to a treat now and then. Though saving for a home requires patience and discipline, the rewards of homeownership are well worth the effort.

 

Build with Confidence

Dennis Family Homes’s heritage, homes, and commitment to quality is here to stay. With over five decades of diversified assets of Dennis Family Group Entities, we’ll help you build with confidence.

Our reputation is based on always engaging respectfully with our suppliers, contractors, and customers. Every decision we make is influenced by our values of honesty, integrity, and care.

To plan your dream home with Dennis Family, call us on 1800 336 647 or get in touch via our website.