Are you dreaming of a new apartment for you and your partner? Maybe you want to break free from the family home and strike out on your own. Whatever the reason for your upcoming apartment hunt, you’re going to need a savings strategy – and fast.
The quicker you begin saving for your ideal home, the more likely you are to end up with everything from a deposit, to legal fees by the time you find your dream apartment. The question is, how can you make sure that you’re saving correctly? Here are some top tips to direct your decisions.
1. Figure Out What You Want to Buy, and What You Can Borrow
Whether it’s your first apartment or your third, the first thing you need to know is what you’re looking for. While we might all love a penthouse apartment worth a million dollars, it’s important to be realistic with your goals. What do you really need from a home? Write a list of your must-haves, such as:
· Close to work
· Plenty of space
· Number of bedrooms
· Number of bathrooms
· Garden space
· Surrounding amenities
From there, you can figure out how much your ideal apartment is likely to cost. Once you know that, you can begin figuring out how much you can borrow. A mortgage calculator will give you an insight into your loan potential based on things like your current salary and living expenses. Remember, borrowing the maximum that you’re eligible for is rarely a good choice. Choose a loan you can realistically afford.
2. Plan Your Deposit
You don’t always need a 20% deposit to buy a home. Some lenders will allow buyers to purchase their dream property with as little as 5%, providing that they’re willing to also take out Lenders Mortgage Insurance. LMI protects your lender if you can’t afford to make your home loan repayments. It adds to the costs of buying your home, but it also reduces your initial deposit requirements.
It’s a good idea to think about what kind of deposit you’re going to aim for before you start searching for your dream property. Remember that you’ll also need to account for extra up-front costs like conveyancer fees, stamp duty, and moving vans.
3. Start a Savings Plan
Once you have an idea of how much you need for your apartment, your furniture, and everything else, you can get to work on your savings. Ultimately, finding the cash for your dream home is going to require some sacrifice. You might have to cut back on meals out with friends and trips to the movies – but it will be worth it in the long term. To improve your budgeting potential, remember to:
· Track and analyse your expenses, so you know where all your money is going.
· Think about opening a special savings account that’s specifically reserved for your home deposit.
· Research all of the bills that you’re currently paying for and find out whether you can get a better deal elsewhere.
· Prioritise paying off debts as quickly as possible. This will give you more money left over to use towards your savings.
Sometimes, you might have to think about making significant lifestyle changes so that you have more money left over from your income each month. For instance, moving back in with your parents can save you a lot of cash.
4. Look for Ways to Ramp Up Your Savings
Finally, don’t forget to look for ways that you might be able to ramp up your savings. First Home Super Savers Scheme can allow you to make voluntary contributions of up to $15,000 a year from pre-taxed income into your first home budget.
There are also a number of states and territories that support first home owner grants for people who are buying their first apartment. It’s worth doing your research to see if you’re eligible for any extra assistance that will speed up your journey towards your ideal property.