How to own your own home on a shoe string budget

February 1, 2016

Buying your first home is a big responsibility, but the pay-offs are huge. It’s more than a roof over your head – it’s a long-term investment that will grow in value over time. And more importantly, it’s freedom!

So you think to yourself; “Hey, I’m young and raring to go – let’s do this!” But there’s just one problem – you can’t afford a packet of noodles, let alone a 10% deposit on a new home!

Rest assured this is a common worry – but saving for home loans (Perth) is totally achievable! Just follow our Beginner’s Guide to Saving for a New Home.

Chapter one: Tracking your expenses

Your bank account balance can be deceptive! Just because it seems to be always running thin, doesn’t mean there’s no room to breathe. Track your expenses and you’ll understand exactly where your money is going. First home buyers are often shocked at how much they waste on relatively insignificant expenses (a taxi ride here, a takeaway coffee there). Remember - it all adds up.

Over the course of a couple of months, make it a habit to write down everything you spend money on. Be honest about what things cost, and be meticulous with what you record (no cheating!).

There are some things that will help you get into the habit, like taking a list with you to the shops and nights out. Also, be sure to print off your bank statement regularly to identify expenses you put on your card (as well as when you withdrew money) – this will help you work out if your strategy is on track.

Chapter two: Setting a budget and savings goal

Now that you’ve identified exactly how much money you have to burn (after bills and other non-negotiables), it’s time to create a budget. This will allow you to set an achievable target and timeframe to save for your deposit. Be sure to factor in some ‘surprise spends’ (like a spontaneous trip to that late night underground bar). For some first homebuyers, it helps to nominate certain milestones to reward yourself (go on – treat yourself to that coffee!). There are many online savings calculators that can help you with this.

Chapter three: Automatic savings

Sometimes when you have that cash sitting there in your wallet, the temptation to spend is almost overbearing. By setting up an automatic payment to a special ‘untouchable’ savings account, you’ll make sure your money is safely saved BEFORE you’re tempted to bid on that eBay item.

Chapter four: Impress the lenders

When you apply for a home loan, lenders will want to know that you’ve been good with your money. This includes finding out if you have any outstanding personal or car loan debts, plus the outstanding balance on your credit cards (and what the limit is). If you want to boost your chances of getting a loan, you need to pay off your debts and ask your credit card provider to reduce the limit.

Chapter five: FREE money

NEVER turn down free money (unless it’s emailed to your junk mail or flashing in an online banner ad). The First Home Owner Grant (FHOG) is a one-off, tax-free $10,000 gift to first home buyers who meet the right criteria. Note that lenders won’t consider it a part of your genuine savings as it will only be gifted after settlement. Nevertheless, it’s a great financial boost to think about for when you’ve reached your savings goals!

In partnership with Easystart Homes - WA first home buyer specialists, we can help you finance the build of you first home -  even ensuring that you receive all of the government grants you're entitled to (including the first home owners grant).

To find out more, contact us below for a no-obligation meeting.

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