Saving for your first home

Most of us dream of owning our own home. It's also likely to be the biggest purchase we'll ever make. It's never too early to save for your dream!
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Most of us dream of owning our own home. It's also likely to be the biggest purchase we'll ever make. It's never too early to save for your dream!
A good place to start is to get an idea of how much you might be able to borrow. Then you'll not only be able to take a look at what's on the market in your price range, you'll also have some indication of what size deposit you'll need.
The easiest way to get an indication of your borrowing power is to use a borrowing calculator - then call into your local branch and have a chat. You'll need to input into the calculator a range of information such as your income, debt level (including any credit card limits) as well as information about your financial commitments. You can also explore the different impacts of interest rate changes and using different repayment options. These may influence the amount you apply to borrow.
These calculators are just a guide to your potential borrowing capacity. When calculating how much you need to save for your deposit, don't forget to take into account any upfront costs (which can be substantial and include stamp duty). Keep in mind too, the impact that any future lifestyle changes may have on your ability to keep up your estimated loan repayments. Interest rates can go up and down, which will affect your repayments.
If you've started saving you can begin to look at buying once you have around 5% of the purchase price.
If you have between 5% and 20% of the purchase price, you may need to pay what's called Lenders Mortgage Insurance, which enables you to borrow a larger percentage of the purchase price. This can be included either in your upfront costs or in your loan repayments so that it's spread out over the term of the loan.
Here some help on setting up a savings plan.
How much, and the type of debt you have when you apply for your loan, may impact how much you're able to borrow. Generally, the less debt you have when you apply, the better.
When buying a property there are other costs usually involved. These can include:
Explore first home buyer concessions (if any) that you may be able to take advantage of in your state.
When you've got an idea of what size deposit you'll need and when you're aiming to save it by, it's time to look at your budget. Find out more about setting up your budget.
There's no way around it - saving for a deposit on a home is a big commitment, so chances are you're going to have to make some lifestyle changes.
Keeping your goal in mind, take a look at your lifestyle and find ways you'll be able to make some changes, big or small. This could be anything from going without a morning coffee ($3.50 x 5 = $17.50/week or $910 a year), to putting less in the trolley at the supermarket.
However, make sure you don't set yourself up for failure. If you've set yourself the goal of saving your deposit in two years, it's unrealistic to think you can sacrifice everything for two years.
It’s worthwhile choosing a savings account that will reward you for growing your savings. Our Westpac Life account is a flexible savings account that pays bonus interest each month your grow your balance.
As your savings grow, it is worth considering other ways to manage your money. A term deposit lets you benefit from a fixed rate of interest (so you’ll have a fixed return on your savings). Term deposits can also be a good way to avoid the temptation of dipping into your savings, as your money is locked away for a set period of time.
Compare savings accounts and term deposits.
This information does not take into account your personal circumstances and is general in nature. It is intended as an overview only and it should not be considered a comprehensive statement on any matter or relied upon as such.