13/07/2024

Before learn

Before we learn

How to Save For a House Deposit

How to Save For a House Deposit

No matter how you look at it, saving for a home deposit is a daunting task. With the average home costing at least $300,000 (and a lot more in many parts of NSW and Victoria), coming up with the 10-15 per cent you need to get going is a lot of crackers in anyone’s language. Let’s look at the different options available.

Taking a second job

Often financial advisers suggest getting an extra part-time job, in addition to full-time employment. Straight off the bat, it’s a personal choice and depends on how badly and how quickly you want to make things happen for you.

For me personally, I’m already working forty to fifty hours a week, and I reckon there’s a better way. You’re only young once, and you don’t want to be spending your ‘fun years’ working your guts out, just so you can get a huge mortgage and keep working your butt off. You’ve got to have some ‘you’ time, you need a social life. It can’t be all about the money – after all you only live once.

My alternative to a second job is to look at the opportunities you have in your present career. Look at ways of getting a promotion, and then bank that promotion. Start to investigate ways to climb up the ladder where you can make the time you spend in your career really start to pay off.

Getting a leg up from your family

Do you remember your grandparents’ birthdays? Have your parents forgiven you for those teenage angst years? Got a rich uncle, aunty or significant other? Are you in your forties and still living in the family nest?

For most young people, the time they need a financial leg up isn’t at the age of forty when (or if) the inheritance cheque comes. The time you can really benefit from a transfer of family wealth is when you’re just starting out.

Feel free to use this line of argument with family members. The answer will be determined on the financial situation of the person you ask, and your relationship with them. Nothing ventured, nothing gained.

(By the way, investigate all your family support options, but at the end of the day, if you can’t afford a house without large amounts of assistance, that’s probably a good indication that now isn’t the right time.)

Going ‘Dutch’

Another strategy that may speed up the process of you owning a home is going ‘Dutch’ with a mate. If you’ve lived with a friend for a while and you get along well, you may want to investigate pooling your financial resources and purchasing a house together. The legal term for this is ‘tenants in common’.

One of the most important things to remember about this is that each person on the mortgage is ‘joint and severally liable’ to pay the mortgage payments. If one party doesn’t pay their share, the lender will chase the other party for the lot.

If you’ve ever tried to split a phone bill in a share house, you’ll no doubt understand that going into a deal such as this can quickly turn into Nightmare on Elm Street. Before you go down this route, I would strongly advise that you talk to your accountant, and obtain legal advice.

At the end of the day, if your share house mate annoys you, it’s not that difficult to get out of the lease and move on. When you own an asset together, things can get a little tricky.

Assistance for first home buyers

In order to help first home buyers get a foothold in the property market, the Federal Government introduced a first home buyers grant, where buyers can apply for a tax-free grant of $14,000 towards their first property.

Be aware that there’s no uniform treatment of the first home grant among lenders. Some lenders won’t allow you to use that $14,000 as part of your deposit, others do, so check with the lender.