News & Advice.

There are many boxes to tick when buying your first home, especially when it comes to your finances.

Give your finances an essential health check with these four important steps.

Budget

Take note of how much you spend day-to-day and where – looking at rent, bills, food, subscriptions, social events, etc. Identify patterns in your spending habits so that you can pinpoint where you can save money. Do you need that second daily barista-made coffee? Are you using that third streaming service? Establish a realistic budget that reduces your daily expenses while giving enough leeway for one-off costs. A set budget will go a long way towards helping you save for a deposit.

Save

You are more likely to get your home loan application approved if you save regularly. Saving for a deposit takes time and discipline, so it is one of the first things lenders look at to determine your capacity to service a loan. A 20 per cent deposit should be the goal. However, it is possible to secure a home loan with a 5 or 10 per cent deposit with lenders mortgage insurance, but bear in mind this will ultimately increase the cost of your loan.

Clear debts

Less debt will give you greater borrowing power. Tally up your debt to get a clear picture of where you stand – this includes credit cards, store cards, personal loans and student loans. Set a realistic daily budget and stick to it. Prioritise paying off debts with the highest interest. Set up automatic repayments. Make extra repayments where possible.

Seek professional advice

Meeting with a lender or financial advisor can help you gain a greater understanding of your financial position, consolidate your debts, and create a realistic savings plan. A lender will give you a rough estimate on how much you can borrow based on your income and living expenses. Having a set figure is a great motivation tool to reduce debt and increase savings.