Thinking of buying a place of your own? Worried about all that entails? Fear not.
Sky-high property prices in many parts of Australia mean that saving for your first house can seem like a daunting experience.
Here are seven tips to make it happen.
Start now It doesn’t matter if you don’t know exactly where or what you want to buy.
It’s going to take you a while to scrape together a deposit, so start a regular savings plan and sort out the finer details later.
Cut down your expenses Saving the big bucks is going to involve some sacrifice.
Try cutting out a little luxury each week – perhaps you could make your own coffee this week, then give up dinners out the next – and switch. It all adds up.
Avoid paying rent “One of the hardest parts about saving for a deposit is saving cash while also paying rent for the place you’re living in,” says financial planner Michael Miller, of MLC Advice Canberra.
Stash your cash somewhere sensible Miller says investing short term in the sharemarket is not usually a good option.
“An online savings account doesn’t pay much in interest, but is still often the right place as it gives you access to your money when you need it.”
Don’t forget lenders mortgage insurance If you can get 20 per cent of the purchase price, you’ll avoid pricey lenders mortgage insurance (LMI).
“It’s fantastic to avoid paying for LMI because the insurance isn’t actually for you, the borrower, it’s for the lender – but you have to pay,” Miller says.
Allow for other extra costs Pesky extras such as conveyancing and stamp duty can add up.
“Find the solicitor you intend to use in advance and ask them for an estimate of their costs,” Miller says.
Stamp duty varies according to state or territory so check the website of your state revenue office.
Think outside the square Can’t afford to buy where you want? Consider co-investing with friends or family (but get a watertight contract).
You could also take on a flatmate or two, rent your spare room on Airbnb, or buy an investment property and keep renting in the location you want to live.