Getting into the property market can feel like an overwhelming task, especially with the recent appreciation in property values in our major cities over the past decade or so. But don’t worry – with some smart planning and the right advice, you can turn the dream of owning a home into a reality. Here are some tips and strategies to help you get there.
Budgeting and cashflow
First things first, get your budget in order. It might sound very basic, but understanding exactly where your money goes each month is crucial. This cannot be understated. Track your spending, cut out unnecessary expenses, and set up a system to save consistently. You can use a simple budgeting tool like Financial Spectrum’s Budget Calculator.
Don’t let market growth discourage you
Property values are growing faster than most people can save right now. While it’s certainly challenging, it’s not a reason to lose hope. Property markets have their ups and downs, and there are programs out there designed to give first-time buyers a leg up.
Make the most of government schemes
Australia offers several fantastic schemes to help first-time homebuyers:
- First Home Super Saver Scheme (FHSSS): This lets you save for a house deposit inside your superannuation fund, offering some nice tax benefits along the way.
- First Home Owner Grant (FHOG): A one-off grant that can significantly boost your deposit.
- First Home Buyer Assistance Scheme (FHBAS): Offers stamp duty exemptions or concessions.
- First Home Guarantee: Allows eligible buyers to purchase a home with as little as a 5% deposit without needing to pay for lenders mortgage insurance (LMI).
Make sure to check out these schemes and see what you’re eligible for.
Family guarantees
If you’re lucky enough to have family support, consider a guarantor loan. This involves a family member offering their property as security, which can help you secure a loan without needing a huge deposit.
Long-term affordability and getting professional advice
Before you dive in, it’s essential to ensure that you can afford the property long-term. Mortgage repayments, maintenance costs, and other living expenses can add up. A financial planner can help you assess your situation and make sure that your purchase won’t stretch you too thin.
Investing for future buyers
If buying a home is more of a distant goal (say, 7+ years down the line), you may want to consider investing to grow your deposit. This strategy can help your savings grow faster than they would in a regular savings account. Just be sure to talk to a financial planner to develop a plan that’s right for you.
Boosting your savings
Every little bit helps when you’re saving for a home. Consider picking up a side hustle, selling things you don’t use anymore, and making sure your savings are in a high-interest account. These steps can help you reach your deposit goal faster.
Exploring rentvesting
Rentvesting is an increasingly popular strategy where you rent in an area you love while owning an investment property in a more affordable location. This can be a great way to get into the property market sooner and build equity over time. Again, getting advice from a financial adviser is key to making this work for you.
Making home ownership affordable
Buying a home doesn’t have to be out of reach, even if it seems like the market is moving faster than you can save. With careful budgeting, taking advantage of government schemes, getting the right financial advice, and considering alternative strategies like rentvesting, you can make your dream of homeownership a reality. Patience and planning are your best allies in this journey. Reach out to a financial planner to help guide you and ensure you’re making the best decisions for your future.
Parker is passionate about helping clients kick their financial goals and live a great life. Read his full bio here.
