If you’re planning to buy a home, the golden rule is to save as much as possible to make a deposit. Nowadays, it’s more challenging than ever to do so.
In Australia in recent years, we’ve witnessed a troubling pair of economic trends – the price of a house in many major metropolitan areas is rising quickly, yet wages remain relatively stagnant. This means it’s going to take longer than ever before for ordinary working families to buy homes.
It’s important to save as much as you can if you want to buy real estate, and that’s especially the case today. If you’ve got your sights set on owning a house soon, it’s crucial to stash away as much as possible from each pay check.
Saving for a home can take decades
It’s always been difficult for hardworking Australians to afford homes, and it’s only becoming more so. New statistical models from UBS reveal that the average price of a house is now 6.5 times the average employee’s annual compensation. In order to afford the deposit and all the loan interest rates that come after, the typical Aussie now needs to save for 18 years.
“This model shows that the time to save a 10 per cent deposit – with a 5 per cent saving rate on AWOTE of $80,000 per year – to buy a house at the average Australian capital city dwelling price of $820k has almost doubled from a long-run trend of around 10 years, to 18 years now,” UBS economist Scott Haslem told ABC News.
Developing consistent saving habits
If you don’t have 18 years to wait before moving your family into a home, the best solution to that problem is to save aggressively. The more you can stash away from each pay check now, the fewer headaches you’ll have later. A heftier deposit means fewer repayments you’ll have to make with interest down the road.
A good rule of thumb is that 10 per cent of each pay check should go toward your deposit – ideally, in a separate bank account so you won’t be tempted to spend that money. Upping that percentage will help you afford a home sooner – and so will working with a broker who can track down affordable low-interest loans.
Get budgeting help from the professionals
Saving for a home is one of the biggest challenges you’ll ever have to tackle. To get a leg up on things, contact us today. We have connections with a wide-ranging network of Australian mortgage lenders, and we can find one who knows your target market and can help you plan your big purchase.