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Saving up for a home deposit

Saving up for a home deposit

Dreaming of owning your own home? With house prices hitting all-time highs, saving for a deposit can sometimes be a challenge. Winners of Channel 7 renovation program HOUSE RULES, Carly Schultz and Leighton Brow, tell how they managed to become homeowners in 12 months.

The amount for a deposit these days is usually a figure that you never even come close to having in the bank and it’s still only approximately 10 % of how much the house is going to cost. Then, on top of that, the interest, stamp duty and what about renovations, furnishings, council rates, insurances and bills. It’s no wonder why we can feel like it’s a daunting task.

But Carly and Leighton wanted to become homeowners!
They did it in 12 months and so can you.
Here is their story.

Firstly, put the real estate section down, and listen. DO NOT fall in love with double story villa property on the beachfront with the lap pool down the side and the big yard out the back. Work out what you can and can’t afford, and then pick up the real estate section.

Leighton and I worked out that we could afford $400 per week each to go into a home mortgage. We opened up a high interest savings account and began practicing paying a mortgage. Just to see if we could get by without that $400 per week each.

Don’t forget the biggest thing people don’t factor in, is the associated costs. When crunching figures of what you can and can’t afford, remember there is much more than just the mortgage repayment, do your research.

For example, Leighton and I worked out our maximum amount we were affording was $800 per week between us, therefore we only looked at properties under $450k as that was going to cost us $700 per week just in repayments on the loan with stamp duty, therefore that extra $100 per week was set aside each week for all those ugly hidden extras.

Working out how much you can afford to save can also help you decide on a realistic deposit amount. Bear in mind that the bigger the deposit, the less the repayments. Save that money every pay day and ‘pay’ it into your savings account, then work out how to live off the remainder.

Make it your priority. Set the goal and stick to it.
Give up the luxurious lifestyle, reduce your existing debts, tear up the credit cards, cut back on spending and going out, take a packed lunch, cook dinner at home, all the things you would usually do when you’re saving for something special. Take a year out.

Do all of these things combined and you will be buying your first home the same time next year. And this advice is coming from us, two spenders; myself who liked seeing my money right where I can see it, hanging in the wardrobe; and Leighton who loved his boys toys. We tightened our belts and it’s been worth it, and surprisingly not as hard as it sounds.

If you’re not great savers, like us, have that agreed amount direct debited from your account so you can’t touch it. The options are endless.

Keep smiling and remember you will get there, we did! It’s one of the biggest decisions of your lives, take it seriously, research well, plan and enjoy!

5 Top Tips

  1. Do your research; buy in up and coming areas.
  2. Practice paying a mortgage- it will give you reassurance that you will be able to keep up with repayments and bills.
  3. Set a goal with your savings- regularly keep track of them and set up direct deposits to help you ward off temptation.
  4. Have a shared vision when renovating- if you are both on the same page, it will save you money (and many arguments).
  5. Buy within your means, but buy something special.

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The content on this website is for general information purposes only. The information is not intended to be a substitute for professional advice and should not be used as such. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your particular circumstances. Speak to our qualified team of financial brokers who may be able to assist you with your situation.