Did you know that for the same cost as your average deposit in Nowra, you could fly to London return 66 times? The average deposit in Sydney could get you to London and back roughly 168 times.
The average house price in Nowra is currently* $485,000 for a 4 bedroom house. Look at a house and land package in the new estates and you’re easily looking at $550,000 – $600,000.
Before you give up on your dreams of ever owning a home and decide to book a round the world ticket, let’s think rationally.
You can continue to plan your holiday, avoiding home ownership. When you return from 12 months backpacking around Europe house prices will likely have risen by 8.6% meaning what cost $500,000 today will be $543,000. That’s an expensive gap year.
4 Steps to Saving a Deposit
1. Borrowing Power
How much can I borrow? Your first step is setting a realistic goal. Can you afford a $500,000 home on your income? Is $400,000 more realistic? This is where your Mortgage Broker comes in. A ‘Borrowing Power’ assessment will tell you, based on your current situation, what you could potentially borrow for a future purchase. Once you know how much you can borrow, we can work out how much you need to save for a deposit, or whether a Family Guarantee may be an option.
With a Borrowing Power assessment in your back pocket, now you know what to aim for. Use a budgeting tool like MoneySmart to identify where your weak spots are. Can you cut back on daily coffees or nights out on the town? Do you really need Netflix and Spotify subscriptions? Try saving the same amount that your future mortgage repayments will be. This will prove to a lender that you are capable of meeting repayments comfortably, increasing your chances of being approved.
3. Clean Up
Do you have more than 1 credit card or Personal Loans from previous holidays? It’s time to evaluate your situation. As a general rule, you should pay off your debts which have the highest interest rate first. Make sure you continue to meet the minimum repayment on all your debts at all times including phone, electricity and AfterPay accounts. Close credit cards that you do not use, or lower the limit where practical.
4. Keep Track
Once you’ve set a realistic end goal, set mini goals to ensure you achieve it. It’s like going on a diet – you wouldn’t plan to lose 20kgs in a year without weighing yourself each week! If you goal is to save $20,000 in 12 months, check your progress on a monthly basis. If you’re account isn’t growing by $1,600 per month then go back to your budget and look at why. Above all, you need to keep yourself honest.
It can be a long process, but in the end, turning the keys in your own front door is an amazing feeling and a journey that Feel Good would love to help you with.
For more information call Ellen on 0423688756 or get in touch here.
*Market growth and median house price data by http://www.realestate.com.au from March 2018.