Tired of renting? There are sensible ways to save up for that first home without giving up everything.

To help you get into your first home quicker, we grilled some of Australia’s foremost property experts for their top tips.

Get into budgeting

Turn budgeting into a game. Budgeting is not sexy, but it does give you control over your finances and it is one of the surest ways to achieve your savings goal. You need to be focused on what you really need instead of what you want. Budgeting can also lessen any financial stress as you become more conscious of your spending.

Split savings into different buckets

Allocating your money into different buckets could help you build your savings momentum quickly according to Rich Harvey, managing director with propertybuyer.com.au. The bucket concept might sound like childsplay, but it can pay off.“Put your money into different accounts and avoid touching it,” says Harvey. “For example, you have an account just for paying the rent, maybe saving for a holiday or saving for a house. Even if you’re just saving $50 a week, you’ll have $2,600 within a year…it gets you to save faster without even noticing it.”

Aim for the best house you can afford

It’s easy to get emotional when buying your first home. But keep in mind that it’s more important to get into the market. “Don’t look at buying your ideal home for your first home,” says Michael Yardney, founder of propertyupdate.com.au. “Be prepared to sacrifice on location or quality a bit and use this first property as your stepping stone to buying a better house down the line.”

Create a dream chart

Create your ultimate property wishlist.Saving for a deposit is all about getting the right mindset according to Harvey. “Rather than looking at how hard is it going to be to save, create a life plan. Realise that you may not get there in one year. But you may be able to in a couple of years. People often overestimate what they can do in one year and underestimate what they can do in 10 years,” he says.

Make saving fun

People tend to stick to routines that are fun. Set your priorities, plan and reward yourself along the way. Once you have reached a milestone, you can reward yourself. Just make sure you don’t undo your efforts with a pricey reward.

Emulate the rich

Savers need to shift the way they think about money says, Harvey. Finding cheaper hobbies can help take the pressure out of the budget. “You find that even really wealthy people will still try and find the cheapest parking space. They don’t buy brand names. Even if they have million dollars in their names, they still live frugally. They don’t like to waste money. It’s a good mindset to mimic.”

Can you tap your family’s resources?

Some first home buyers are able to access family support. There are a number of ways you can do this, perhaps your parents could help with the deposit or act as a guarantor on a loan. Just remember that lenders may have rules relating to these arrangements and what they consider to be a genuine deposit.

Don’t rush

There’s no need to rush and buy at the beginning of the year warns Cate Bakos, founder of Cate Bakos Property. “Don’t panic if January feels tough for you as a buyer,” says Bakos. “The cities generally have very few auctions in January and run on skeleton staff during the first two weeks. Don’t rush if the market is slowing down. What this means is that there are limited properties on the market and strong buyer interest will create tough competition. However, February will start to feel better as more listings come onto the market.”

Don’t hold out for that perfect house

The truth is, they don’t exist says Bakos. “Make a list of your must-haves and nice-to-haves and be pragmatic when a suitable one comes along. In a moving market, a long search can cost significant dollars. At the same time, don’t ‘settle’ for one which is missing your must-haves.”

Pain to power

All first-time buyers need to make sacrifices, particularly given the average size of a deposit. Getting in early could be the best thing you’ve ever done. Even with tenants in an investment property, there will be a difference between the rent and the mortgage that will need topping up from your salary. But, it could be the best thing you’ve ever done says Chris Gray, CEO of Your Property Empire. “If you do get in the market at the age of 20, by the time you’re 30 that $500,000 property could have risen to $750,000 or even $1m+ which will set you up for life. Even after the first few years of owning that property you may be able to withdraw some of the equity to buy property number two and then even number three before the ten years is up,” Gray explains.

Get into good habits early

The sooner you get into the routine of taking money from your wages before you spend it, the better. “Property rises quicker than you can save, and consequently you need to commit as much as you can into the plan,” says Gray. “You’ve also got to be realistic. You’re going to need at least a 5% deposit and 5% for stamp duties and legalities – therefore you’ll likely need $30k – $60k for a $300k – $600k property. If you’re saving $1,000 a month you need a Plan B as by the time you save that deposit, the property could easily be $50k – $100k more.”

Work for it

Get a second job or even a third. It might sound absurd, but it could get you into a home sooner, says Gray.Giving up that smashed avocado might be painful, but the sacrifice will pay off.
“It doesn’t have to be forever, but if all of those extra wages can go towards saving that initial deposit, within 12 months, you could be there. Think back to your goal and dream – is it worth a year of pain to get what you really want and to set you up for the future?”

Consider rentvesting

Rentvestors continue renting in the area where they like living after buying an investment property somewhere else. This means a tenant can help pay the mortgage and most of the cost of maintaining the property. It can also offer tax benefits including negative gearing, which helps at the start of the property ownership. Make sure to get tax and financial advice before you embark on this strategy.

For full article click here

Please remember to keep us in mind for all of your buying, selling, renting or property management needs – you can make contact via the following means:
Drop in: 2 Elkhorn Avenue, Surfers Paradise QLD 4217
Phone: 07 5592 1464
Email: jnewlands@professionals.com.au
Website: http://professionalssurfersparadise.com.au/