How to save for a home deposit

First home buyers often need to put down tens of thousands of dollars as a deposit because of rising house prices– which can seem impossible unless you’re earning a fortune, or are lucky enough to have borrowed from the Bank of Mum and Dad.

If you are finally decided to own your first home but the thought of saving for a home deposit seems to get in the way, read on these three helpful and smart steps to get you going:

Analyse your current financial situation.

Assess your current spending habits and work from there. Know where your money is going by determining which household cost eats up most of your budget. Spending Tracker is an app where it helps you keep track of your expenses. Set a budget and stick to it. Don’t spend on items that are not essential. Avoid impulsive purchases. These habits delay your dream of owning a home.

Manage your debts.

Once you had prepared your budget, get on top of your debts. Pay off your credit cards as this helps you increase your borrowing power. Consolidate your debts to eliminate multiple payments and interest rates. If you wish to know how much you can potentially borrow, check with our calculator.

The key to building up a deposit is to start saving as much as you can as soon as you can. Ideally, you have to save 20% of the purchase price of the property. If you have less than 20%, there are banks and lenders that offer deal to clients who have this kind of circumstance.

Which leads to the final step…

Seek professional help.

Consulting a finance broker can lead you to a variety of deals available in the market. Soul Finance Group has access to a variety of lenders and banks. We can help determine if you are eligible to a First Home Owner Grant (FHOG) and can even guide you in the application.

You can also consider whether your parents or other family members may be willing and able to help you out with a one-off financial gift or interest-free loan.  If you are renting a property and has an excellent payment history, we can help you use this in your home loan application as there are lenders which offer that kind of deal.

The process of owning a home can be tedious but if you have the right sources, you’ll be living in your dream home in no time. Consult with me today to get you started!

Disclaimer:

Credit Representative (486927) is authorised under Australian Credit Licence 389328.

 This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

The post 3 Helpful Smart Ways on How to Save for a Home Deposit appeared first on Soul Finance Group.

Home loan terms explained for first home buyers

Home ownership can be an exciting milestone in an adult life but the jargons and complicated terms that come with securing a finance can be a little too overwhelming. You might find yourself stuck with a term and you’ll hate to slow down the process just because you fail to learn what stamp duty means.

Knowledge is power, right? So if you wish to familiarise yourself with some of the home loan terms, here is a quick guide for you:

Comparison rate

Banks and lenders are legally obliged to include a comparison rate when advertising a loan interest rate. Essentially, a comparison rate is the “true” cost of a loan which includes the interest rate, fees and charges and displays a single percentage rate. The whole purpose of a comparison rate is to make it easier for borrowers to compare various loans from different lenders. It is important to take note that comparison rates only use one scenario, for example a $150,000 loan over 25 years. In order to get an idea of the comparison rate that applies to your loan, look at the comparison rate for the amount and term closest to the amount and term of your loan.

Conditional approval

Conditional approval means you have been pre-approved and a quick check on your eligibility of a loan has been performed and you are qualified to make mortgage repayments on the amount you have been pre-approved for. A pre-approval gives you an indication of the maximum amount you can borrow. By getting your pre-approval you have the power to negotiate with confidence. However, it does not guarantee loan approval. You will still need to go to secure the relevant documents that the bank is requesting for formal approval.

Equity

Equity is the difference between the amount your property is worth and the amount you owe on your home loan. For instance, your home is worth $800,000 and you owe $300,000, your equity is $500,000.  As you pay off your home loan, your equity increases. You can borrow against the equity in your home to buy an investment property.

Fixed Rate

The interest rate of a fixed rate home loan remains the same for the entire term of the loan, regardless of changes to interest rates.

Interest Only

Standard home loans require you to pay both the principal (home loan amount owed) and the interest charged by the lender for providing you with the loan. An ‘interest-only’ home loan, on the other hand, requires a borrower to pay only the interest on the mortgage through monthly payments for a fixed term. This structure requires the repayment of the original borrowed amount in a lump sum when the home loan period is complete or the property is sold.

Refinancing

Refinancing lets you change your home loan to suit your new circumstances.  It is always a good habit to have your home loan checked by a finance broker to see whether the original home loan you chose is still the most suitable option for you. The funds from the new home loan will be used to pay out your existing loan. It often comes from a different lender, but many people refinance with the lender they’ve been using for years. If you move to a new lender, that lender will take care of paying out your existing loan.

Settlement

After you’ve made an offer on a property and the lender has given you a final approval, settlement is where the lender makes the final payment to the seller and property is officially yours.

Split Loan

This type of loan allows you to split your home loan between a variable and fixed rate at a ratio of your choice, giving you the flexibility of two loan types. A home loan can be split to have one part at a variable rate, and the remainder at a fixed rate. It may be split 50% variable and 50% fixed, or some other ratio such as 60%/40%.

Stamp Duty

Stamp duty is a tax levied by all Australian territories and states on property purchases. This is based on the property purchase price, location and loan purpose. Consult your finance broker today to calculate your stamp duty.

Variable Rate

This is an interest rate on a loan that fluctuates over time depending on the cash rate decision set by the Reserve Bank of Australia (RBA). The obvious advantage of a variable interest rate is that if the underlying interest rate decreases, the borrower’s interest payments also fall.

Now that you have equipped yourself with some of the common home loan terms, go ahead and kick off your home loan application. Consult with me today!

Disclaimer:

Credit Representative (486927) is authorised under Australian Credit Licence 389328.

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

The post Home Loan Terms Explained for First Home Buyers appeared first on Soul Finance Group.

The Great Australian Dream starts with owning a home. Buying your own house is exciting and life-changing. Except for the part where you have to save for the deposit, especially for those stuck in a rent situation.

Save for your home loan deposit while renting

The good news is there are ways to go around your budget and save a deposit for your home, even while renting! If you are really serious in committing to this goal, you have to be fully dedicated, disciplined, and responsible.

Sharing with you some of the tips to boost your home loan deposit savings—even while you’re renting:

ASSESSMENT

The first step is to assess your financial situation by identifying your total budget, your spending habits, and debts. Check your bank statements and receipts to monitor your spendings. At this point, you have to determine your wants versus your needs (and you might be surprised that majority of your spendings goes to your ‘wants!’) Take the time to do this as this is a crucial part.

Once you know where your money is going you can start to budget and make a plan for saving.

BUDGETING and SAVING

This can be a daunting task as you have to think ahead and really disciplined yourself in sticking to the budget you created for you to be able to save.

You can start by finding ways to lower your monthly rent. You can opt to finding a roommate to help you with the cost of the rent. Or you can move to a more affordable location or smaller or older place. The hint is to compromise. You want that dream house, right? Any of these tips can help you save, say a $100 dollars per week, which could add over $5000 to your savings account each year.

Keep an eye on the energy you use. Chances are, your monthly utility bills are a big fraction on your spendings. Another way is to look for ways to earn extra cash. There are various freelance jobs online where you can check and might match your skills.

Put your tax refund straight to your savings account. Maximise your savings by placing them into high interest earning accounts.

There are lenders which accept rental payments in lieu of genuine savings because your ability to pay rent on a fortnightly or monthly basis can show them your ability to meet your mortgage repayments. Soul Finance Group has access to these lenders and loan deals that are tailor-fitted to your needs and spend capabilities.

Never underestimate the power of your income. Even while you’re renting, your dream home is still within reach. With the right mindset and a professional to help you, you can never go wrong.

Think you’re ready to buy your own home? Find out now.

Disclaimer:

Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.

Credit Representative (486927) is authorised under Australian Credit Licence 389328.

The post How You Can Save For a Property While Renting appeared first on Soul Finance Group.

However, if you just deposit this in the bank, you know too well it won’t grow as much because of the minimal interest on deposits. You read it online, you occasionally see it in the news—if you want to ultimately grow your funds, investment/property investments and stocks are the way to go.

Consulting a finance professional is a smart step. Initially, you will be asked what are your goals. Of course, your ultimate goal is to build and grow your funds by investing. You will then be offered an investment + insurance plan. Depending on the proposal, this finance professional will show your projected earnings in the next, say 10 years. You will learn that the first few years, your initial premium will be spent on insurance and protection benefits. According to your agent, it’s wise to insure yourself first so that in case of hospitalization or death in the future, your beneficiaries (in this case they could be your family) have something to receive. I’m a finance broker myself and I’m not saying that’s wrong. In fact, that’s a good proposal if and only if you are investing for your and your family’s future.

You are a young professional starting to build your funds, insurance is good for safety net purposes, however, it is best for you to prioritise to earn in such a way that your funds will maximise its earning, the product that the agent offers does not align with your purpose.

In a financial pyramid, this is the guide I show my clients:

Financial pyramid

In as much as you want to agree with the proposal, if 1, 2, and 3 are not yet fulfilled, don’t sign up just yet. As a young professional who just joined the workforce, establish your finances well. Millenials today have the tendency to be impulsive but I also believe some have the ability to be critical especially when it comes to money matters. It just doesn’t make sense that you are preparing what you can leave to your family (insurance) without actually preparing how you are going to live (basic, emergency funds, savings.)

First, determine how much money you can set aside a month for investment. Second, look for an investment outlet. There are a lot of competitive deals in the market which I’m happy to introduce you to. Feel free to shoot me a message or call me.

Disclaimer:

Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.

Credit Representative (486927) is authorised under Australian Credit Licence 389328.

The post A Millennial’s Guide to Building Funds appeared first on Soul Finance Group.

You now have more reasons to start living (literally and figuratively) your dream. To kickstart the year, let me share 5 First Home Buyer tips I wish I had known before even purchasing my own home! I hope you find these tips helpful as much as my friends and clients did.

First Home Buyer tips I wish I had known before purchasing my own home

Feel free to share these tips on your social media accounts and tell your friends who are also first home buyers about it. If you have further questions or clarifications, feel free to shoot me an email or call me on 0408 081 082.

The post 5 First Home Buyer Tips (What I Wish I Had Known Before Buying My First Home!) appeared first on Soul Finance Group.