Buying a property, particularly the first, can often be a daunting task. Saving the initial deposit is often the greatest hurdle.
However, seeking advice through a professional property loan consultant, together with breaking down the deposit saving process into steps, may see you owning your own property sooner than you think!
Mortgage Choice recommends these tips for those looking to enter the property market:
Factor in additional costs
Remember it's not just the cost of the property that you will be paying (see example page 7)- You also need to consider the additional costs, including solicitors, settlement agents, surveyors, moving costs, service connection fees and insurance.
Establish a good saving pattern before buying. Track your expenses and train yourself to think about where your money is going. Set yourself a budget and cut down on your expenditures. Small sacrifices along the way help, for instance using public transport instead of taxis.
S
et yourself a limit
So saving doesn't seem like a lengthy ordeal, set yourself a time limit to save for a deposit (say, minimum six months) for your property. Get advice early.
Live at home If you are lucky enough to have generous parents, this is a great way to save money. Put aside the money you would be saving on rent for your first deposit and don't spend it.
Start with a lump sum Saving is always easier if you have something to start with. Before you start you may want to sell anything you don't need. Make it a fun experience maybe hold an auction or garage sale and invite friends and family.
Consider the different mortgages available
These days, there are a range of loans available that do not require a large deposit, such as 100% and family equity loans. Look into these as possibilities for entering the market.
New account
Start a totally separate savings account to the one you use on a daily basis so you are not tempted to use it for everyday life. Think of it as a deposit account and choose one that rewards savings with a high interest rate return such as a term deposit or cash management account.
Borrow within your means Speak to your Mortgage Choice loan consultant and accountant to work out what monthly repayment you can really afford. Your savings, sense of achievement, and first property should add to your happiness.
Be aware of your other loans
Be aware that any other loans you take out, such as a car or personal loan, will decrease the amount you can borrow for your property. Consider your goals carefully before committing and be aware of the implications. See your Mortgage Choice loan consultant to see how other loans will affect your borrowing power.
Consider buying outside of the area you 'ultimately' want to live Although you probably have a good idea of where you would 'like' to live, properties in that area may be selling at a premium. If saving for a deposit is proving to be a challenge, consider buying in an area that may not be quite as developed or as 'popular' as some for an initial purchase to get into the market — work hard to put a dent in the mortgage and, together with capital growth, use your equity to move into the suburb of your dreams.
Also, for second home/investment property buyers, you can refinance or use equity from your other properties to go towards this loan. Alternatively, you can refinance other mortgages along with your new purchase and consolidate, possibly saving you money.
18-Sep-2007