Buying a holiday house in Australia can be an enticing prospect, as it offers both rental income and a personal escape should you decide to use it for your own trip. However, it’s essential to approach this investment with a clear understanding. Start by focusing on its financial aspects rather than just the lifestyle appeal. […]
Purchase Your First Home Faster with These Good Financial Habits
Buying your first home is a significant milestone, but it can also be a challenging journey, especially with rising property prices. But with good financial habits, you can accelerate your path to homeownership. Here are some essential tips to help you prepare for your goals better and purchase your first home faster.
1. Identify How Much You Can Save Monthly
Before exploring a cosy apartment unit or three-bedroom house in Hobart, you must understand your finances well and create a detailed budget aligned with your home-buying goals. Start by listing your income and subtracting expenses, including rent, bills, loan repayments and online subscriptions. Use a spreadsheet or bank statements to track your spending and identify how much you can save each month. This budget will reveal if you’re on track to meet your home-buying goals.
For example, if you earn $5,000 monthly and your expenses total $3,000, you have $2,000 left for savings. Aim to save a significant portion of this surplus. That way, you will likely have enough for a down payment in no time, and a stable savings account that can help impress lenders to give you a lower interest rate or more favourable loan terms.
2. Cut Down on Unnecessary Spending
Want to save more money each month? Review your expenses further and eliminate wasteful spending. You may be subscribed to multiple streaming services or paying for unused gym memberships. Or have you been buying lunch four to six times a week? Reducing these unnecessary expenses can free up more money for your home deposit. For instance, cancelling two out of three streaming services could save you around $30 per month, which can add up to $360 a year.
3. Open Multiple Savings Accounts
Many people choose to utilise online banking to create separate savings accounts for different goals, automating transfers to these accounts with each pay day. For instance, automatically transferring $200 to a dedicated home savings account each month can lead to significant savings over time, and also helps to reduce the temptation of dipping into your savings. If you know the money is earmarked to purchase a house, it can be easier to stick to the goal. With this habit, you can save a deposit for your first home faster.
4. Set and Reward Financial Goals
Saving should be rewarding. Set realistic savings goals and treat yourself modestly when you achieve them. This keeps you motivated without derailing your financial plans. After saving $5,000, why don’t you treat yourself to a weekend getaway, budgeting a small portion of your savings for this purpose? Just make sure these rewards aren’t too costly and track them in your budget plan or spreadsheet.
5. Maintain a Flawless Credit Score
Here’s another financial habit that may help you buy your first home faster: Working on clearing any debts and improving your credit score. Pay all your bills on time and consider consolidating high-interest debts to make them more manageable. Consolidating multiple credit card debts into a single loan can reduce interest payments and simplify your finances. Also, avoid excessive use of ‘buy now, pay later’ services; you don’t want lenders to think you can’t handle on-time payments.
6. Explore Additional Income Streams
Even in a dual-income home, saving up for a mortgage deposit from a typical nine-to-five job may be difficult. Consider side hustles or part-time jobs to boost your savings. Online businesses or freelance work can provide extra income without overwhelming your schedule. For instance, freelancing as a writer or virtual assistant for a few hours each week could earn you an additional $200 to $300 monthly.
If you’re still having trouble saving for a deposit, you may always lower your house expectations and look for a less expensive property for your first home. The important thing is you get to align your income with home-buying goals better.
7. Utilise Government Grants and Schemes
As you get nearer to your goal of purchasing your first home, don’t forget about government grants and schemes available for you. First-time home buyers in Australia can benefit from the First Home Owner Grant (FHOG) and other government incentives. These grants can provide significant financial assistance, making homeownership more accessible. In Tasmania, the FHOG offers up to $30,000, which can substantially contribute to your home deposit. Check the FHOG eligibility requirements in Tasmania and other states before buying your first home.
8. Find a Value-Driven First-Home Buyer Loan
Choosing the right home loan is as important as saving for a deposit. Compare different loan options to find one that’s right for you. An interest rate difference of less than 1% p.a interest can save you thousands over the loan’s lifetime, however, it’s important to consider much more than just the interest rate. Loan flexibility and features are essential to compare. For example, a loan with a slightly higher interest rate but the added flexibility of additional loan repayments and a redraw facility may be much more beneficial and cost effective for certain people than a basic home loan with a low interest rate.
We’re Here to Help You Purchase Your First Home Faster
The journey to homeownership is unique for everyone, and it’s essential to find a balance that works for your lifestyle and goals. However, adopting these financial habits can significantly increase your chances of buying your first home sooner. Moreover, with careful planning, disciplined saving and the right financial advice, your dream home can become a reality much sooner than you think.
For personalised guidance and expert assistance in going through the home-buying process, consider reaching out to Deltos Finance. Our mortgage brokers in Hobart can provide tailored mortgage solutions that align with your financial situation and homeownership aspirations. Give us a call today to get started.
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