Budgeting for your first home means you have to have financial discipline and commitment. However, this doesn’t mean there are no shortcuts.
The following will provide you with some guidance when you begin saving for your home:
Have a goal for savings
Every successful budget has to have a goal that is set in concrete. You don’t want to begin with simply just saying you’ll ‘save for a house’. You need to figure out what type of property you would like to buy and what price they are selling for. You can try a borrowing calculator which can help you to work out what you can afford based on your expenses and your budget. When you have a more solid picture in your mind of what you want to achieve you are going to be more likely to work as hard as you can towards that goal. Do you intend to knock down rebuild? Renovate or buy a brand new home? These will all determine and shape your goal.
How much do you need for your home?
Are you buying an already established home or are you looking at building a home? If you are building and wanting to create a new home design, then you need to take the cost of the home to build and the cost of the land to buy into consideration. Work out what size home you want to build and whether you want a small block of land or a few acres. You need to allow for loan fees, solicitor fees, and the fees involved in real estate if you are buying an already established home.
Do you qualify for the first home buyers grant?
It isn’t as simple as it sounds saving for your home loan and you may need to pay stamp duty and other types of upfront costs. There is still some good news, as there are many places that offer first home buyers grants to those purchasing a home for the first time. Depending on the property, you can use this as a deposit, to upgrade home features when building or to keep for the future. You will need to qualify in order to be approved.
Don’t go for an unrealistic time-frame
Now when you are thinking about a time-frame you need to set a realistic one. Think about how much you want to save and how long you want to put the money away and work out whether you can save that much in the amount of time. This is done by calculating how much you need to put away monthly.
Save the money first… then you can spend!
An important step here is to ensure you put the same amount you have settled on away each and every month. The best way to do this is to pay the money into a separate account before you get tempted to spend it. You might see something nice for your home but don’t be encouraged to spend that money. Too often we make excuses for spending, but this will see the account slowly decrease.
You can budget for your first home, however, it will take time and you will need to sacrifice things. Swap the movie night out for a movie on the couch and every bit of money you save, transfer it over to your mortgage account. This will see the account growing as you frequently add to it and don’t take anything out.