Saving a deposit
Saving for a 20% deposit for a property can seem impossible, especially when the median price for a house in Hobart last year was $786,000# and Tasmanian households are spending on average $1,141* a week on general household living costs.
So, how can the average person save up a home loan deposit, to get a foot on the property ladder?
To be honest, unless you’re lucky enough to get a lotto windfall, it’s not easy but by considering a some different strategies, it can be done.
So let’s look at few things you can do …
First things, first – start with a budget. Plug all your incomings and outgoings into our handy online budget planner. It’s hard to ignore your financial situation, when it’s there in black and white. If it’s not as cheery as you’d have expected, don’t panic, at least you’ll be able to see exactly where your money is going and make some hard calls about what to do to get back on track.
If the word ‘budget’ makes you want to run and hide, it might be time to start looking at things from another angle.
Why not pay yourself a set amount each time you get paid? To do this you’ll still need to figure out what you spend your money on, so you don’t leave yourself short but once you’ve done this you can set up a regular transfer of what’s ‘left over’ using your internet banking and watch your savings grow.
Start a self-imposed spending ban
It may seem rather drastic to cut out all non-essential shopping for an extended period of time but that’s what more and more people are doing. This type of ‘saving’ is not for everyone. It comes down to really wanting to do it – a bit like a diet – you need willpower and self-control. So if you’re happy to go without a new pair of jeans or restaurant dinners for a year, then go for it or maybe, you could just cut back on your takeaway coffee or bring your lunch to work – whichever way, making a few changes to reduce your spending can only be good for your savings.
What is rentvesting? The logic goes something like this – you rent a place where you actually want to live and buy in a more affordable suburb and then rent out that property.
In theory, because the property you buy is likely to be cheaper, the deposit you would need in this scenario would be less. Having a lower deposit, means you don’t have to spend years and years saving.
But beware. Rentvesting requires thorough research and planning. As with all big financial commitments, it’s always best to chat with an expert. They’ll help you with work through some of the basics, like "can I really afford it?", and "what are the things to look for in an investment property?".
A Guarantor loan
A guarantor loan can be a great option for getting a foot into the property market.
Guarantors are generally immediate family members who help to secure additional funds by using their own home’s equity or another property they might own to provide security for a portion of your loan amount.
The guarantee can be limited to a specified amount providing peace of mind. It also allows the guarantor’s property to be released when this specified amount has been repaid.
As with any loan there’s some really important things you need to consider before going ahead with one and it can be confusing when researching all your options online.
One of the cool things about Bank of us, is that our call centre is on the North West coast of Tassie and not on the mainland or overseas. So when you need to, you can call us.
So what’s your saving tip?
*Australian Bureau of Statistics Household Expenditure Survey 2015-2016