The time now needed to save for a deposit blocks many would-be buyers out of the property market. These three tips, however, can help you save your deposit – and get into the market – sooner:
Set a goal and stick to it
Saving is easier if you have a defined goal to work towards. Set a dollar amount and a timeframe which you can then break down into manageable parts, ensuring you reach your goal quicker.
Save 10 per cent of your income
Automatically transferring 10 per cent of your pay as soon as you receive it will boost your savings balance considerably. It may take a little budgeting at first, but once you have a routine you won’t even miss it.
Identify needs versus wants
Work out what you can live without. Taking your own lunch to work, for example, rather than getting takeaway can save you heaps. Be realistic about how much you need for the type of property you want and how much you can afford to save – then get saving right away!
For many borrowers, saving for a deposit can be a challenge – particularly when they have rent to pay, plus other living expenses.
Lenders Mortgage Insurance (LMI) can be a real enabler for borrowers, essentially allowing them to borrow more than 80 per cent of the purchase price, thereby reducing the amount of deposit required.
A higher LVR loan is considered to have more risk for the lender. LMI therefore covers the lender in the case that you default on your loan. It’s a one-off payment made when the loan is taken out and a cost that needs to be factored into your calculations. However, LMI can be capitalised into the loan, allowing you to add it to the overall loan amount, which is paid off over time in line with your mortgage repayments.
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