How to save a deposit for your first home

via Domain.com.au

The hardest part of buying your first property is saving the deposit.

Prospective homeowners in Queensland have the benefit of more affordable property prices, but it still takes discipline to pull together that all-important down payment.

According to Mortgage Choice’s 2016 First Home Buyer Survey, it takes about two years for two-thirds of Queensland-based first homebuyers to save a big enough property deposit.

“This data is hardly surprising when you consider that property prices continue to surge and wages have all but stagnated over the last couple of years,” Mortgage Choice’s Jessica Darnbrough said.

“Data from the Australian Bureau of Statistics shows the average home loan has climbed 300 per cent over the last 20 years, while wages have only doubled.”

Saving a property deposit has never been easy and requires discipline – usually at a time when young people are finally earning a decent salary and have money to spend.

Qualified Property Investment Adviser Andrew Hancock of MyPropertyPro said many prospective homebuyers struggle to set aside money to save each month because their expenditure exceeds their income.

“You need financial discipline on some level to save money and ultimately you need control over it, but some people struggle to deal with the expenditures and then have money left over to save,” he said.

“I personally advocate reversing the situation and viewing your savings as a bill that needs to be paid, like any bill that you can’t get out of, and put it away first. Then you’ll learn how to live off the rest and the savings plan will just naturally develop.”

With property prices potentially rising faster than a would-be first homebuyer’s ability to save a deposit, Hancock said another strategy may involve paying lenders mortgage insurance – but only after they’ve sought professional advice on their financial situation.

“Sometimes trying to ‘out save the market’ is a bit of a futile experience and it may be better to buy in earlier with a lower deposit, but people do need to understand their own risk profile and personal situation,” he said.

Darnbrough said that while it is becoming harder for many buyers to save a deposit, there are a few tactics they can employ to reach their savings goal faster.

Strategies to increase their savings include shopping around for a better savings deal from their lender, building a budget, asking for discounts, and simply taking their lunch to work, she said.

“This is an oldie, but a goodie. Those who bring their own lunch to work every day, can ultimately save themselves upwards of $50 a week, or $2600 a year – money that can then be put towards a home deposit,” she said.