Saving For Your First Home!

Something that we have found quite difficult is sourcing information about: 
"How to know when you can afford to buy a home"

Nathan and I have been dating for around 7 1/2 years now and about 6 of those years have been spent living together! Thats a wholeeee lot of rent right there. Say on average we were paying $300 a week for rent together, that's $15,000 a year in someone elses pocket! As soon as we realised how much money over the 6 years we have lived together we could have been putting towards our own house (about $90,000!), we decided it was time we look into buying a place together. 

It's actually rather difficult for first home buyers to get a straight answer about how much money they are going to need upfront for a house deposit, which are the best options in terms of building or buying and what is the best way to encourage saving. So we went about researching everything and anything we could, just to get an idea of what was possible and how low we would be waiting before we could seriously think about having a home of our own. 

Some good sources for information that we found:

http://forum.homeone.com.au/
(Home building forum where you can ask professionals and other home owners any questions you have about everything to do with your first home!)

https://www.moneysmart.gov.au/managing-your-money/saving/saving-for-a-home
(Government initiative to provide information about saving money, home loan calculators, savings calculators etc)

http://www.aussie.com.au/
(There are lots of different brokers and they are all generally free! You can ask them what kind of money you will need for a deposit and they will also tailor an assessment for you based on your salary/dept/savings to tell you what kind of home loan you would be eligible for and how much deposit you will need)

http://www.realestate.com.au
(Realestate.com.au is a great site for browsing house and land packages, established homes and also it has a nifty function allowing you to see the statistics of certain neighbourhoods and suburbs. That way you can see which ones are booming, drowning or full of cheaper homes for first home buyers)

Everyone tells you that the more deposit you have for a home the better! Which is very true. Obviously you pay less interest on the life of the loan if you pay more upfront and the banks will be more inclined to lend you money if you show them you are good at saving! 
But in todays economic climate, the window of opportunity for first home buyers is becoming narrower and narrower. The price of living is rising, home prices are rising, wages aren't really increasing dramatically and jobs can sometimes be hard to come by. 

We found, that even with all these things against us, the best thing to do is set yourself a time goal, work out how much you can save each month (without taking it out again), then work out how much you will need for a deposit (5% of the house price or less if it's a house and land package) and just start saving. 

If we had started saving when we were 18, in 7 years we could have had an enormous deposit! But i guess you just have different priorities at the time (socialising etc). I really wish someone had told me just how much money you would really need. But i guess hindsight is great like that. 

I downloaded a great app called countdown, which allows you to countdown to your goal and add images. Here i added a photo of the house we want and put in the 12 months until we had saved our deposit! Works a charm with the saving motivation. 

The commonwealth bank also have a cool function on their online banking called goal saver, where you set up a goal saving account with an amount and time and it shows you if you're on track with the balance and how much you need to put away each week/month to meet your target. It also allows you to set up an automatic payment!

This was unfortunately not an option for us, but there are accounts for first home buyers!
Unlike other savings accounts, a first home saver account can only be used when you are saving to buy or build your first home. Each year the government will make a 17% contribution on the first $6,000 you deposit each year. This means that if you deposit $6,000 in one financial year, you will receive $1,020 from the government.

Some of the main features of these accounts are:

• The interest you earn on the account is only taxed at a rate of 15%.
• You have to save at least $1,000 each year over at least 4 financial years before you can withdraw the money. These 4 years do not need to be consecutive.
• The maximum account balance is capped at $90,000 but this cap will be indexed in future years. After your savings reach this level, only interest and earnings can be added to the balance.
• The money has to be used for your first home. If it is not, it is added to your super and you can't access it until you are retired or can meet another condition of release.
• If you buy your first home before the 4 year period is up, you can withdraw the money in your account at the end of the 4 year period to put towards your mortgage. You will not be able to make any more deposits once you have built or bought a property.

So now we are just playing the waiting game of saving our money each month and hoping that when the time comes next year, we will have enough money to start building our home together! Fingers crossed!