For many, the Australian dream is to buy a home on a quarter-acre block. Whether you want to do this for stability, for your family or because it makes financial sense.
However, with house prices high in Australia’s major cities, it’s getting harder for people to buy their first home. If you’re in the process of saving up for your deposit, here are five tips that can help you make your purchase a little sooner than expected.
While the ideal option may be for you to buy a home alone (or with a partner), sometimes it makes sense to buy the property with someone else. Normally, this sort of deal happens with a family member – parents or aunts and uncles – where the two parties cover half of the deposit and repayments each.
This allows first-time buyers to get on the market more quickly and perhaps get a bigger home more easily. Down the track, you can either agree to buy out the co-owner’s share or you can agree to sell the property and split the profits.
Buying a home where you ideally want to live can be expensive, so many people are turning to ‘rentvesting’. This means they continue to rent a home in their ideal suburb (or living with parents) while buying in a more affordable area and renting that home to someone else.
As the renters pay off your mortgage, you can delay the decision of whether you want to move there yourself one day or sell the property and use the profit to help fund a move in an area you prefer.
Renting out a room
If you’re in a position where you can put down a good deposit – either you’re a great saver or you’ve received a windfall or inheritance – but you’re not earning enough to cover ongoing repayments comfortably, you may want to consider buying a home that has enough space that you can rent out a room or section to a friend. This helps cover your mortgage (and bills!) while your monthly payments are going to your future and not helping someone else pay off their mortgage.
While cutting out avocadoes alone won’t help you out too much, being smart with your spending can make a huge difference to when you can afford to put down a deposit. To do this, you should create a budget with a clear amount you want to put into your savings account each week.
Then you should look at your expenses and see what you can cut down on. Deciding against holidays for a few years, quitting smoking, making lunches for work and cutting down on other luxury expenses can all contribute to your savings in a positive way.
Speak to the experts
Buying a home is one of the biggest expenses you’ll ever have in your life. It’s a big and stressful decision and there’s a lot more to it than meets the eye. If you’ve never done it before, there’s so much you have to think about that you may not be aware of, which is why speaking to one of our team of conveyancers can do wonders for your plans and state of mind.
To help with your planning, we’ve created a free book. Find out more about how to make the best decision by downloading Buying a home: your easy guide to conveyancing.