Rising incomes and stagnate house prices mean home buyers are taking less time to save for their first home deposit, research suggests.
Couples buying their first property took about three years and nine months on average to save a deposit in 2012 – about three months less than in 2011, according to findings from a Bankwest study.
“People are starting to think that it’s a good time to buy and feeling more comfortable about buying,” said Bankwest retail chief executive Vittoria Shortt.
“Variable borrowers have seen their interest rates fall by 67 basis points on average this year, which has saved them almost $673 in repayments for a $300,000 home loan and almost $1346 for a $600,000 mortgage,” said Michelle Hutchison, spokeswoman for RateCity.
And that’s before December rate cuts are factored in later this month, she adds.
Tips to help you buy in 2013
As first home buyer conditions improve, the dream of owning a home may seem more achievable for many Australians.
Latest data from the Australian Bureau of Statistics shows the number of first mortgages financed in September this year was 4 percent higher than September 2011.
So if you’re a first home buyer with a goal of securing your first property in the New Year, here are some tips to help make the dream a reality.
First, you’ll need to set a budget and start a savings plan. There are some great online budget planners available now, such as the government’s Money Smart budget tool, which will do most of the hard work for you. Try also using a mortgage calculator to determine the monthly financial commitment you’ll be facing.
Hutchison urges borrowers to plan for a buffer of at least 2 percentage points higher than current rates – that is worth an extra $400 per month for a $300,000 home loan.
“Even though the Reserve Bank dropped the cash rate last week it’s inevitable that interest rates will eventually rise, and borrowers should plan ahead to avoid financial difficulty,” she said.
Second, do your homework before it comes time to apply for a loan.
There are hundreds of mortgage options available in the market so it pays to compare home loans before you decide on one. While the interest rate will be significant when it comes to pricing, it’s also important to compare fees and the various home loan features. For instance, do you require an offset facility – a kind of transaction account which can help to reduce the amount of interest paid on a home loan? If you’re planning to build or renovate, then a construction facility may be necessary.
“There’s a lot of money to be saved using a site like RateCity and comparing your home loan to what’s on the market so use this time to shop around,” said Hutchison.