So you’ve decided to start researching to buy your first home in Perth – how exciting! And yet we know it can feel equally dauting. At Cedar Woods, we’re well versed in supporting first home buyers on their journey so you’ve come to the right place.
Saving for your home deposit is the ultimate delayed gratification; it will take patience and discipline, but the wait is totally worth it.
If you’re planning on financing your home through a bank or financial institution, you’ll traditionally need a 20% deposit if you want to avoid paying Lenders Mortgage Insurance (LMI). You may be eligible for low deposit programs like Keystart that can get you into your own home with a deposit as low as 2%, or the First Home Guarantee Scheme which requires a minimum of 5% deposit. Both offerings have eligibility criteria which apply so be sure to chat to your mortgage broker or financial advisor on if these are suitable for your personal situation.
The first step to saving is identifying where you can save – and the most effective way to do that is to keep an expenses diary for a few months where you record every single dollar you spend. Yes, it’s tedious – but, it’s also very revealing. Now circle every item where you can make cuts. Do you need three streaming services? Can you switch to free Spotify? How often do you really go to the gym? Three little changes and you’ve already added over $1200 a year towards your deposit right there!
Credit card and after pay debt are the cigarettes of the finance world – the interest rates and debt profile can hurt your mortgage application. Use your new savings to clear these debts as quickly as possible. Once they are gone, make your savings work harder for you by putting them in a high interest savings account or term deposit.
The next sum to work on is your new home budget. To avoid mortgage stress in the future, work back from how much can you comfortably afford in mortgage repayments each month. We recommend speaking to a mortgage broker who can help you calculate how much you can borrow and help you understand how much you’ll need to keep aside for stamp duty and other fees associated with purchasing your first property.
Once you’ve determined how much you can borrow, the next question is how do you want to borrow it? The choice can feel overwhelming. Do you want a variable rate, fixed rate or a mixture of both? Will you be repaying interest and principal, or interest only? Do you want the ability to offset your savings against your home loan? Or do you want a split loan that lets you mix and match features? A financial advisor or mortgage broker can help you work out the pros and cons of each loan product and find the best option for you.
The government wants to see you get into your own home, almost as much as you do.
There is a range of state and federal government grants available for first home buyers in WA. You’ve probably heard of the $10,000 WA First Home Owner’s Grant for new homes, but did you know you also qualify for the First Home Owner Rate? This is a concessional rate of stamp duty and it applies to both new and established homes up to $530,000, and vacant land up to $400,000.
While you work on saving for a deposit, Cedar Woods will work on building vibrant, affordable communities in areas where you want to live. To help you get first home ready, we’ve put together a helpful guide.