First Home Buyer Tips

First home buyers have been noticeable absentees in the NSW housing market since the NSW government removed stamp duty concessions. Statistics published by a number or media outlets show that only 6-percent of 2013 mortgages in NSW are for first home buyers. Whilst these figures may be inaccurate as some are not recording applicants as first home buyers when no government grant is available, it still shows minimal involvement by this group.

The barriers to home ownership often come down to saving a deposit and fellow Loan Market broker Kevin Paine from Mackay, QLD has provided some interesting and useful tips in his recent newspaper article.

Key tips to saving a deposit:

Have a budget – determine your income vs spending

Set a goal – save $xxx per wk/fn/mth and have $xxx by XXX date

Keep your saved deposit separate from your normal bank account

I personally have used the 1o-percent rule to save in the past with fantastic results. This rule works on the principle of paying yourself first and then living on the balance of your income. Once you have worked out how much you earn, set up a direct debit (or direct salary credit) to your savings account, that way you always save 10-percent of your income. Your remaining income is your disposable income and this must be sufficient to cover your living expenses for this to work.

If you get a pay rise then adjust your 10-percent contribution accordingly, or better still allocate all of the new income towards additional savings. I implemented this and was contributing 15-percent of my income at the peak of my savings plan.

This method can work if you budget well and ensure you are not wasting money on impulse or non-essential purchases such as that daily coffee. Make sure your budget includes an amount for unexpected expenses so that you do not have to dip into your savings when you get that unexpected bill. If you have a large disposable income then this rule alone should not be used as spending the remaining funds just because it is over the 10-percent is not financially beneficial.

For help with budgeting and getting the right information to prepare for your first home loan, contact your local broker, John Paine.

John is a mobile mortgage broker in Newcastle servicing all the surrounding suburbs in the Lower Hunter and Lake Macquarie area.