The biggest obstacle for most Doctors who want to buy their first home, or in some cases upgrade to their next home, is saving up enough cash for a deposit. Your situation is very unique, shifting from your studying days working part-time gigs to a full-time job with a full-time income! This means in all likelihood you are now earning enough to afford the repayments on a home loan but don’t have the cash saved for a deposit.So what do you do?
Understanding how much cash you need for a deposit
This varies depending on your profession and circumstances but generally speaking the ‘sweet spot’ in terms of getting the best home loan is to have a 10% deposit available, plus another 5% of the property value for Stamp Duty andassociated costs. You may avoid paying Stamp Duty depending on which state you are in as the government will waive this up to a certain price so please check in with your local Credabl team before embarking on your savings goal.
How do you go about obtaining this princely sum of money?
Plan A for a lot of people is to approach the bank of Mum and Dad for a loan or perhaps some of that inheritance early.If they can help out with some of the deposit then that’s great but even then, you may still need to save towards the rest.
The formula for saving sounds really simple, you just need to spend less money than you earn. However, for a lot of people it can be difficult to do and keep track of. Here are some top tips to help you achieve this goal.
Top Tip #1:Use a budget planner so you can see exactly how much money is coming in from your regular wages and how much you are spending on both essential items such as rent and non-essential items (Uber eats, shopping, nights out etc). This tool will then calculate how much money is left over each week or month and you can then calculate how many months it will take you to save for the deposit depending on your spending habits. Seeing this in front of you will make a huge difference as all of those little items can add up very quickly. Click here for a Budget Planner we recommend trying.
Top Tip #2:Set up a separate account to hold your savings in. At the moment you are going to earn almost no interest on your savings but this is more of a psychological trick to ensure your savings are kept separate from the money you spend and avoid any temptation!
Top Tip #3:If you need a new car then don’t automatically think you need to pay cash for this. In many cases it can make more sense to take out a car loan and leave your savings set aside for the house deposit.
Top Tip #4: Earn more money! If there are additional shifts or overtime available then grab them with both hands. A few extra hours here and there may not seem like much but it will all add up. A little inside tip here as well is that all that extra income you have earned will make your home loan approval easier.😉
Top Tip #5: Take advantage of any Government Schemes available. These change from time to time but currently we have the First Home Saver Super Scheme which allows you to salary sacrifice additional funds to super and then withdraw them for a house deposit. Without going into the finer details this one allows you to pay less tax on your earnings which leaves more savings in your pocket instead of giving it to the tax office.
Top Tip #6:There are also State and Federal Government incentives to purchase or build a brand-new property, whereby you will receive a cash payment from the Government which can be used as part of your deposit. Normally they are only available for brand new properties which may not suit everyone’s needs.
Top Tip #7: If you can then try to purchase a property that is under the stamp duty threshold whereby the government will waive stamp duty up to a set purchase price. If you can avoid stamp duty then that’s a large chunk of deposit that you don’t need to save up.
Top Tip #8:Lastly, just remember that your first home is not necessarily going to be your forever home. Be realistic with the purchase price and compromise on a few must haves on your property shopping list. If you are aiming to buy the dream home then you will be saving up for a long time, aim a bit lower and you’ll find that 10% deposit a lot easier to achieve.
If you need help with your savings goals or trying to calculate how much deposit you need, then talk to one of our Credabl team who will be happy to share their experience and make the process easier for you.
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