CONGRATULATIONS, You have decided to buy a property and are ready to embark on this exciting journey. At first the process can seem complicated, but we are here to make your journey simple and seamless.
Let’s start with the first step, getting yourself deposit ready!
Table of Contents
What is a deposit?
A deposit is your initial contribution to the purchase price of a property. When buying an off the plan property, the agreement to buy is usually not binding until the contracts have been exchanged by both parties and a deposit has been made by the buyer.
Here are a few tips to prepare to save your deposit:
Take a look at your current spending
Keep an eye on your spending habits over time. A good idea would be to keep a track of all your bank accounts online, for approximately a month and see how much you have spent during the month. Making sensible and calculated decisions on spending can go a long way in saving money.
How much deposit do you need?
It is possible to buy a property with a deposit as little as 5% of the property’s purchase price, especially if you are a first home buyer. Many buyers aim to save between 10-20% of a property’s purchase price, though this is not always necessary.
What can you afford when it comes to your deposit?
Before buying a property, you’ll need to know what you can afford. This includes all the costs involved in completing the purchase such as the deposit, stamp duty (if any), and any additional expenses.
What happens if your deposit is under 20%?
If your deposit is under 20%, you will likely incur costs relating to Lenders Mortgage Insurance (LMI). LMI can help you get a loan with a smaller deposit and the good news is this can be added to the loan amount you borrow.
Now that you are ready, it’s time to make a plan for your savings goal.
Set a realistic timeline, so you can start a savings plan while aiming for a clear target.
Being honest with yourself and a partner as if you are doing this together helps to make the matter more important as you set a realistic goal and strive towards it!
Step 1: Work out an approximate property price you think you can afford.
Step 2: Work out your deposit amount based on your estimated purchase price.
Step 3: Set a realistic length of time you can commit to saving for this deposit.
Step 4: Calculate how much you need to save on a monthly/weekly basis to work towards this goal.
For instance, if you save $400 per week you would have saved over $20,000 in 1 year for your deposit.
We bet you didn’t realise you could have $20,000 (or roughly 5%) deposit saved in a year for your property purchase?
Think you’re finally deposit ready, or even need some more guidance? Speak with our team today!
Here at St Trinity we are the property experts with more than 15 years of experience and are here to guide you through your property journey. We give you the best property advice and help you find a home or investment that is perfect for you.
To find out more call us at (02) 9099 3412