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Buying a home

Savings tips and info on buying property, whether it’s your first home or your next.

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Budgeting for a home: what costs to consider

A home is easily one of the most expensive you’ll ever make in your life, so it pays to consider the total costs of buying a property before diving into it.

Upfront costs

The most common upfront costs associated with buying a property include:

  • Lenders mortgage insurance. This is the cost you pay when you borrow more than 80% of the property’s value. If you want to avoid it, consider saving up for a 20% deposit before you buy.
  • Legal & conveyancing fees. These fees are part of the purchase transaction, when you seek assistance from a solicitor or conveyancer to help you prepare documentation and deal with the vendor on your behalf.
  • Stamp duty. This can be a huge expense when it comes to buying a property. It varies from state to state, though concessions exist for certain types of buyers (e.g., first home buyers).
  • Building & pest inspections. These are a must as they help ascertain that the property is in good condition and that no hidden issues can show up later on and incur unexpected expenses you have yet to budget for. In many cases, they can also provide you with a bona fide opportunity to renegotiate on the price.

Ongoing costs

Below are some ongoing costs often associated with owning and maintaining a property:

  • Water and council rates. These are charges that arrive on a quarterly basis and are specific to your own property.
  • Strata and body corporate. These charges largely apply to apartments, units or townhouses. They cover the maintenance of the shared areas around the property, building insurance and the administrative fees to run the body corp / strata management.
  • Home and contents insurance. The cost of home insurance can vary from property to property, and from insurer to insurer, so be sure to research the market well to find the right policy for you.
  • Regular maintenance and repairs. It’s important to budget for regular maintenance and repairs, should the need arise. These types of expenses tend to be irregular but when they do occur, they can be expensive.

How to reduce the costs of buying a property

There are several options available to bring down the out-of-pocket expenses you have to spend upon buying a property, such as:

  • First home owners grants. Many states and territories offer help to eligible first home buyers in the form of a grant. It’s a one-off payment which is usually paid at the time of settlement to your home lender and applied directly to your home loan.
  • First home super saver scheme. Under the First Home Super Saver Scheme, first home savers can make voluntary concessional (taxed at a discounted rate of 15%) and non-concessional (already taxed at your marginal rate) contributions into their super fund which can be later withdrawn for a deposit on a first home.
  • Keystart and Homestart. Keystart is an initiative sponsored by the WA government, providing a number of low deposit solutions for WA home buyers. There are low-deposit home loans specific to the Perth metro area, some with deposits as low as 2%. Homestart, on the other hand, offers low-deposit home loans (as low as 3%) to eligible South Australians.
  • Stamp duty concessions. Most states and territories offer stamp duty discounts for first home buyers. Depending on the purchase price of the property and where you’re buying, you may even be exempt from paying stamp duty at all.

Home buying checklist

Buying a house is never as simple as walking into a real estate agency and slapping a thick wad of cash down onto the table. There are dozens of things you need to consider before purchasing. Here’s a home buying checklist to get you started:

  1. Consider your motivation for buying. Properties are expensive, so you should only buy one if you believe it will provide long-term benefits.
  2. Work out what you can afford. It pays to know what you can or can’t afford. This helps you set a strict price limit so you don’t get carried away and go for a mortgage you’d struggle to repay.
  3. Find a good home loan. Almost as important as your choice of property is your choice of home loan. Choosing a good value home loan can save you hundreds of thousands of dollars over the life of the loan.
  4. Consider the property’s location. Where the house is should have a major impact on where you buy, whether it’s to live in or rent out.
  5. Research the market. Searching for a suitable home doesn’t only happen online. Take time to drive around yourself and inspect the are thoroughly.
  6. Evaluate if the house is right for you. Once you’ve narrowed down to a few properties of interest, conduct an inspection of each property inside and out. It’s worth doing some research on the neighbourhood too.
  7. Have the house professionally inspected. Professional inspectors will also look at potential structural and safety issues with the property that you might have otherwise missed, and could cost you a small fortune to fix later on.
  8. Do a title and statutory authority search. A title search gives you an official record of a property’s ownership history and can tell you if there’s anything preventing you from buying it.
  9. Negotiate a price. It’s important that you stick to your agreed upon budget, and take emotion out of the equation – it’s easy to see yourself living in a certain home, but if you can’t afford it you can’t afford it. Be prepared to walk away if you think the real estate agent is being unreasonable with their price expectations.
  10. Get your documents ready. Be prepared to take out a home loan to finance your purchase. To make sure the whole process is as painless as possible, have the relevant documents on hand and ready to show a prospective lender.

How to save up for a house deposit

You normally need to put down a deposit that is equal to at least 5% of the value of the home to buy a house. For traditional banks, that’s usually the smallest deposit they will entertain, though many lenders will require at least 20%. If you can save 20% deposit, you can avoid having to pay lender mortgage insurance. Here are a few ways you can boost your savings for that down payment.

  • Consider moving back in with your parents or living with a flatmate. This will free up a big chunk of cash to pop straight into your savings.
  • Boost your income by either picking up a few more shifts at work, or a side hustle such as driving for Uber, pet sitting, doing some jobs on Airtasker, etc. You can also rent out what you’ve got but don’t use enough like car space or a spare bedroom.
  • If you have unwanted belongings or furniture lying around, selling them online is a quick way to earn that extra income.
  • Go easy on streaming services. Pick a favourite and cancel the rest, depositing the savings straight into your home deposit fund.
  • Automate your savings with a high-interest savings account by setting up an automatic transfer so that a portion of your pay will go straight to your savings every month.
  • Consider investing, especially if you can’t find a decent savings interest rate anywhere. This will ensure that your savings aren’t eroded by inflation and can keep up with the rise in house prices. If you’re not familiar with investing, this beginner’s guide to investing may be useful.
  • Taking public transport or riding to work can help you cut down on the costs of running and maintaining your car, not to mention the ever-increasing parking fees in the cities.
  • If you’ve recently got your tax refund or scored a pay rise, consider putting the extra income towards your house deposit to fast track your journey to home ownership.

Below are some of the lowest home loan rates this month.

Provider Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Purchase or Refi, 80% P&I Smart Home Loan 2.88% 2.90% $1,660 More details
Low Rate Home Loan w/Offset 2.90% 2.92% $1,665 More details
Discount Variable 80% 3.07% 3.09% $1,702 More details
Basic Variable New Business Special Offer 3.08% 3.08% $1,704 More details
Base Variable Rate Special 3.20% 3.24% $1,730 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
Purchase or Refi, 80% P&I Smart Home Loan
2.88% 2.90% $1,660
More details
Low Rate Home Loan w/Offset
2.90% 2.92% $1,665
More details
Discount Variable 80%
3.07% 3.09% $1,702
More details
Basic Variable New Business Special
3.08% 3.08% $1,704
More details
Base Variable Rate Special
3.20% 3.24% $1,730
More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 1 November 2019. View disclaimer.

Frequently asked questions

1. How long does it take to save for a house deposit?

How long it takes to save up for a house depends on your income, your expenses and where you want to buy. Depending on where you live in Australia, saving for a house deposit can take anywhere from a couple of years to nearly a decade. This doesn’t take into account rising house prices, which is one of the biggest challenges facing first home buyers.

2. Can I buy a house with no deposit?

You can’t really get a 100% deposit home loan from any of the traditional lenders. They might make case-by-case exceptions based on income or a person’s repayment history but as a general rule, you’ll need to cough up a minimum of 5% of the property’s value to be eligible for a home loan. Alternatively, you can consider taking out a home loan with a guarantor.

3. Can I buy a home on a low income?

It is possible for low income earners to take out a home loan, though lenders may take a closer look at your application and go through it with a fine-toothed comb. Check out these tips on how to increase your chance of getting a mortgage on a low income.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in 2018. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

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