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Brown & Brown
e-Newsletter
by
Garth Brown
Send this newsletter to your friends
WHAT’S TOUGHER …
Saving for a new home, or paying of a mortgage?
House prices have
skyrocketed and the size required for a deposit is now substantially higher
making it much harder to save the amount that will satisfy a lender. In
days gone by it was easier to go to a bank and with a good work and credit
history acquire almost 100% home loan, however, today lenders want to see a
genuine record of savings and a specific amount saved before they will
enter into any home finance arrangement.
So how do you save the
large amount of deposit required to get a loan and buy your first home?
There is only one answer …
SAVE MORE and SPEND LESS!?
That may sound simplistic but the reality is good saving habits only come
about by spending less and being disciplined in saving - ask the experts.
Here
are 8 tips to help you save your home deposit
1. HOW
MUCH DO YOU NEED TO SAVE?
Firstly work out what you will need. Get an idea of property
prices in the areas you are interested in living in, follow the property
market closely as it is always changing. If you want to get into the
property market quicker consider buying a cheaper house to get started,
this will mean a smaller deposit and lower mortgage repayments. Once you’ve
established your requirements then you can set a savings goal.
2. BANK ACCOUNT
To help you get into a positive savings frame of mind check
with your Bank what type of account pays the best interest rate with
minimum account keeping fees then open up a separate 'home deposit'
account, usually an 'at call' bank account is the best option.
3. THE THIRD RULE
Now this may seem impossible for some but according to Financial Advisors
the most successful savings plan is THE
THIRD RULE ...
• SAVE one third for now
• SAVE one third for the future
• SAVE one third for your ego
But how, you may ask, can I save one third of my income? You have to be
frugal in your spending habits. If you are able to achieve this type of
ongoing savings plan you will end up not only with a deposit on a new home,
you will be on a good path toward saving the necessary funds you will need
for retirement.
4. SALARY/WAGES – SAVE 10% OUT OF
EACH PAY
As soon as you get paid transfer 10% into the separate 'home deposit'
account. Once you get used to doing this it will soon become a good savings
habit. Calculate what you can go without that is non-essential and you’ll
find that 10% is not an unreasonable amount in fact you may find you can
save more than this, but at the least stick to 10%.
5. eBAY and GARAGE SALES
eBay and Garage Sales are the ideal place to offload your unwanted
household and personal items. Remember 'one person’s trash is another
person’s treasure' so don’t just throw out when the local council clean up
comes along be creative and turn the throw outs into cold hard cash, you
may be surprised how much you can earn this way, but make sure you deposit
this extra cash into your 'home deposit' bank account.
6. PAY OFF DEBT
Paying off your debts makes sense for two main reasons:
1) it will increase the amount of money you can borrow; and,
2) it will free up your cash to use towards eventual mortgage repayments.
It definitely is a good option to ‘drill down’ into your budget and get rid
of credit card debt and personal loans before you commit to a mortgage
worth hundreds of thousands of dollars!
7.
ELIMINIATE LUXURIES
• If you are a couple stay with one car – a second car is double the
running costs.
• Cancel your Cable TV subscription
• Don’t upgrade to the latest mobile phone
• Take your lunch to work
• Don’t buy take-away coffee everyday
• Wait for SALES before buying new clothes / or try the opp shop
• Skip Alcohol for a month every other month – this is a BIG saver
These are just a few ideas, you may think of others.
8. PART
TIME JOB
If possible, look for extra work, even a couple of evenings a week could
increase your income level and add to your savings plan. Every little bit
extra helps and if you are serious about buying a home your Lender will
look at your savings habits to determine if they will give you a mortgage.
GARTH BROWN COMMENTS
The bottom line is that saving a deposit is tough as you are also paying
rent and if you are young person your income may not be that high. The
timeframe to acquire a deposit will be up to your determination and how
much you can save each week.
The first few years of
paying off a mortgage are hard work and also tough. Any spare cash is usually
directed to furnishings and/or renovations. You may be starting a family
and the bills are going up and you wonder where you will get the extra
money from to pay for everything. But it eventually gets easier as the
years pass by as you receive a few pay rises and stop spending on your new
home.
What
is the answer to the question 'what’s tougher?' The reality is, saving for
a deposit is tough. And paying a mortgage in the beginning can be tough but
a mortgage is just like paying rent with the advantage that you are
building an asset and gaining capital growth for the future.
Brown and
Brown Conveyancing
With over 16 years experience in Conveyancing and Real Estate
matters we are well placed to handle the conveyance for either Vendor or
Buyer. Our up-to-date website is full of practical advice and information
on selling and buying including an archive of our eNewsletters for easy
reference. And for the convenience of our Clients we have established easy
methods to contact us through our new Mobile website and Information
Hotline, here are the details:
Mobile Website
To facilitate our Clients busy on-the-go lifestyle we have
recently launched our purpose designed mobile website for use on all mobile
devices, please go to: http://www.conveyancersmobile.net
Information Hotline
We have established a new information hotline for your
convenience, just call: 1300 ASK
CPC
Please do not hesitate
to contact me for your first obligation free consultation.
Thank you for your referrals!
Garth Brown
• send this newsletter to your friends •
We appreciate your referrals.
Next eNEWS: “Understanding the
how and when and what with selling your home.” - May 2014
In the meantime keep in touch with Garth Brown on
. . . . . . . . . . .
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Thank you again for your valued custom.
License No:
1055854
We appreciate the referrals.
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