Work through these steps to get your deposit together. Remember there are other upfront and ongoing costs of buying property, like stamp duty and conveyancing, that you’ll need to be able to cover. Take a look through these steps to navigate this big financial decision.
Step 1: Start saving for a deposit
- Get on top of any debts – This is worthwhile because the fewer debts you have, the less you’ll be paying in interest and the easier it will be to get approved for a home loan. You might like to check your credit score and see what you can do to make any improvements to your score if needed.
- Commit to a savings amount – Decide how much you can save on a regular basis by creating or reviewing your budget. You’ll want to save as much as possible, but make sure your budget is achievable. If you can, save a similar amount to what you expect your home loan repayments will be – this can help you budget over the long term.
- Start saving for a deposit – A great savings goal for a house deposit is 20% of the purchase price of the property, plus enough to cover those other initial costs. Some lenders only require a 5% deposit, but with a smaller deposit you have to pay for lenders mortgage insurance.
Step 2: See if you can get financial help
Find out if you can get government support to buy your home. This will differ, depending on what state or territory you live in, but is worth considering:
- First Home Owner Grant can help you pay for your home and reduce how much you pay for land transfer duty or stamp duty. See what you’re eligible for in your state or territory.
- First Home Super Saver Scheme allows first home buyers to save a deposit through their super. You can save a maximum of $30,000 through this scheme and can contribute up to $15,000 to your super each year. Read more about the scheme.
Step 3: Shop around for the best home loan
Once you’ve got your deposit ready, it’s time to shop around for the best home loan for you.
- Understand the home loans available – you can get a fixed or variable rate loan or a loan with extra features like a mortgage offset account or redraw facility. ASIC MoneySmart’s guide to choosing a home loan can help you get a grasp of your options.
- Shop around for a loan with a low interest rate – the lower the interest rate, the less you will have to pay over the life of your loan.
- See how much you might be able to borrow – it could be worthwhile talking to at least two different lenders to see how much you could borrow based on your income and expenses.
- Consider talking to a mortgage broker – mortgage brokers deal with banks or other lenders to help you find a home loan, based on your needs, goals and what you can afford. Take a look at ASIC MoneySmart’s guide to Using a mortgage broker if you’re thinking of talking to one.
- Get pre-approval to buy – when you think you’re ready to buy, it’s time to get pre-approval. Your lender will need evidence of your financial situation to see how well you would be able to repay the loan. Once you’ve got pre-approval, it lasts for three to six months. You should be ready to go!
This guide contains general information to support you as you build your financial fitness. It doesn’t consider your personal circumstances and is not financial advice. The information is true at the time of publishing.