Saving for your first home

Get an idea of what you might be able to borrow

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.

What size deposit?

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.

Clearing debt

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.

Other costs

When buying a property there are other costs usually involved. These can include:

• Stamp duty
• Lending fees
• Inspection fees (such as building and pest inspections)
• Lawyer fees.
   

Explore first home buyer concessions (if any) that you may be able to take advantage of in your state.

Budget time

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.

Tweak your lifestyle, but keep it real too

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.
 

So where to next?

• For more information read buying my first home or
• Contact us