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The Burden of Buying: A Guide to Saving for Your Own Home

There’s an old catchphrase that goes ‘two steps forward and one step back.’ For those saving to purchase their first home, that feeling may be all too familiar.  

 

It often seems like every time you have made inroads and put aside some savings, an unexpected expense comes along and, before you know it, you are back to square one.  It is an arduous process and in a rising market, often a disheartening one.

 

At Wisdom Homes, we understand the pressure many young people and families are under trying to juggle bills and rent whilst saving for a home.  We are committed to building stunning, quality and affordable homes, where you can finally kick your shoes off and know you have at last found your forever home.

 

Unfortunately, short of a timely windfall, there are few quick fixes when it comes to saving for a home.  However, with a little strategic thinking, there are a few ways which will get you there faster.

 

Government grants

 

In an effort to make housing more affordable for the first home buyer, the NSW Government has introduced a number of measures to encourage them into the real estate market.  Through a series of grants, incentives and discounts, these rule changes are designed to ease the savings burden on first home buyers.

 

With a view to stimulating new home growth to ease the housing shortage, these incentives are particularly advantageous to those considering buying house and land packages or building a new home.

 

The new rules, which came into effect as of 1 July 2017 are:

 

  • Abolishment of stamp duty on all homes valued up to $650,000
  • Relief on stamp duty on homes up to $800,000
  • Removal of Insurance duty on lenders’ mortgage insurance
  • $10,000 grant when building new home up to $750,000
  • $10,000 grant for purchasing new home up to $600,000

 

Streams of income

 

No discussion around saving for a first home would be complete without stating the obvious–find extra sources of income.  Getting a second job has a twofold effect when it comes to getting you into the property market.  

 

  1. Realise your deposit faster
  2. To your lender, the income will be considered as part of your finance application, increasing your attractiveness as a borrower.

 

Buy to rent

 

Getting a foothold onto the proverbial property ladder doesn’t necessarily mean buying a home to live in.  An ideal compromise is to buy an investment property which basically pays for itself.  Interestingly, the further you head away from the city, the cheaper property is but rents change only marginally.

 

Consider the following rough figures, based on a deposit of $50,000 at ANZ bank’s current variable rate over 30 years:

 

Scenario 1

Purchase cost: $1,000,000

Mortgage repayment: $1286 per week

Rental income: $500 – $600 per week

Out of pocket: Approx $600 per week  

 

Scenario 2

Purchase price: $400,000

Mortgage repayments: $474 per week

Rental income: $350 to $400 per week

Out of pocket: Around $100 per week

 

Whichever way you get there, reaching the milestone of buying a new home is one of the most satisfying and rewarding experiences most of us will make.  The secret is not to buy the most expensive home you can afford, it is simply to buy smarter.  Once you have placed yourself on the property ladder, you are ideally positioned for a prosperous future.

 

If you are considering the many advantages a house and land package offers, visit one of Wisdom’s deluxe display homes and be inspired.  We build affordable, quality homes with flexible design options and an ethos of integrity and exceptional customer service.

 

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