Stimulus measures such as the HomeBuilder Scheme did bring forward the buying decisions, but they remain active in the market, even after last year’s strong property price growth.
Compared to the period prior to the pandemic, new loan commitments to owner occupier first home buyers are at their highest level since October 2009, according to the Australian Bureau of Statistic Lending Indicators for December 2021.
Saving remains a vital approach
Last year’s minor adjustments to mortgage serviceability calculations had not resulted in a significant change in loan approvals. However, it remained vital for prospective property owners to show genuine savings. Lenders always want to see a genuine savings history, including funds that represent at least 5% of the property’s purchase price.
Banks generally recognise that it is difficult to save the deposit for your first property, because of the added expenses of paying rent. However, it is never a bad thing for any potential borrower to show that they have been diligently saving funds over a period of time, even if those funds represent only five per cent of the purchase price.
Top 5 property deposit saving techniques
Cut up the credit cards
Lock up your credit cards and pay cash every time to help prevent overspending. Before you you hand over your hard-earned cash, think do you really need to buy this?
Prepare a budget – and stick to it
Prepare a budget – or work with someone who can help you create one – and stick to it. Be realistic and honest about your income and expenditure as well as your ability to save.
Do you really need a new car?
Personal loans for cars can be a big stain on your borrowing capacity. Before you borrow $50,000 and pay exorbitant interest rates on a car loan, consider whether you can ‘make do’ with a more affordable vehicle to achieve your home ownership goal.
Forfeit the expensive holiday
We are all itching to travel again, but prospective property owners need to prioritise putting those funds towards a deposit and opt to holiday somewhere more affordable instead.
Consider selling unused items
Everyone has things lying around that they don’t want, don’t need, or simply don’t use.
Some of these items could actually be worth selling, especially if they’re great quality and in excellent condition, such as furniture, musical instruments, baby gear, designer clothes, old bikes in the shed, etc. Plus, it’s never been easier to do so.