How much do you need to save for a deposit?

Are you ready to embark on the exciting journey of homeownership? Finding the perfect place to call home is a thrilling adventure. One crucial aspect of this journey is understanding the ins and outs of the home loan deposit. Let's delve into the key factors that will help you’ll need to know.

The Golden Rule of Deposits:

When it comes to securing a home loan in Australia, the golden rule is the deposit. Most lenders typically expect a deposit ranging from 5% to 20% of the property's purchase price. But why shoot for 20%? Well, crossing this threshold often comes with a significant perks – avoiding the dreaded Lenders Mortgage Insurance (LMI). LMI is an additional cost designed to protect the lender, and steering clear of it can save you a tidy sum. From Thousands to Tens of Thousands.
Your Interest rate will be significantly lower also. Saving you hundreds of dollars in interest cost each month!

First Home Buyer Goodies:

If you're stepping into the property market for the first time, there's good news. Various Australian states and territories offer first home buyer grants and incentives. These can be game-changers, providing a financial boost to help you make that initial leap onto the property ladder. Be sure to check with local government authorities for the latest offerings and eligibility criteria in your area.
These can range from grants to complete stamp duty waivers!

Navigating the Low Deposit Landscape:

For those with a smaller nest egg, fear not. There are tailored solutions available, such as low deposit home loans. While these options may come with higher interest rates or specific conditions, they open doors for aspiring homeowners with limited upfront funds. But make sure you don’t over commit and use the low deposit as a way to take out a loan you really can’t afford.

If you want to learn more listen to the our podcast episode on ‘how much you really need to save to purchase a house.’ listen now:

Remember, the world of real estate is dynamic, and regulations may evolve. Connect with mortgage brokers or financial advisors to stay on top of the latest developments. Your dream of home ownerships awaits, and with the right knowledge, you're well-equipped to turn the key to a new chapter of your life. Now go get it!

Crushing Debt: How the Snowball Effect Can Turn Financial Avalanche into Victory.

In the vast and challenging landscape of personal finance, the journey towards debt freedom can sometimes feel like navigating through a blizzard. Yet, amid the snowflakes of financial stress, there's a strategy that's been gaining popularity for its motivational prowess: the snowball effect.

Unveiling the Debt Snowball Method:

Picture this – a snowy slope of debts, each one towering over you like a daunting mountain. You're equipped with financial skis and a determination to conquer the financial peaks. Enter the debt snowball method – a strategy that doesn't just focus on numbers but taps into the psychology of personal finance.

The Art of List-Making:

Start by laying out your debts on the table, like pieces of a complex puzzle. Credit cards, loans, and overdue bills – they all find their place in this financial inventory. It's not just about what you owe; it's about understanding the terrain you're about to conquer.

The Dance of Order:

Now, imagine arranging your debts not by interest rates, but by size. The smallest one takes the lead, standing tall as the initial adversary you aim to defeat. This order isn't about logic; it's about strategy.

Spotlight on the Smallest:

Direct all your financial might towards the smallest debt. This isn't just about numbers; it's about the thrill of victory. When that first debt falls, it's not just a payment; it's a triumph, a declaration that you can indeed conquer your financial mountains.
Ensure you keep up the minimum payments on all the other debts also!

The Snowball Effect:

This is Momentum Unleashed. Now, picture the snowball rolling down the hill. As you apply the payment from the conquered debt to the next in line, the momentum builds. What was once a struggle becomes a thrilling descent towards financial liberation. It's a snowball effect – a powerful force that propels you forward.

With each debt vanquished, the echo of success reverberates through your financial journey. The once intimidating debts now seem conquerable, and your financial confidence grows with every payment.

Repeat Until Victory:

Repeat the process until you stand triumphant atop the summit of debt-free living. The journey may have started with a snowball, but it ends with an avalanche of financial freedom.

The snowball method is not necessarily the most financially efficient strategy (compared to the avalanche method, which prioritizes debts with the highest interest rates first), but it can be psychologically effective. By paying off smaller debts first, individuals experience a sense of accomplishment and motivation, which can help them stay committed to the overall debt repayment process.

Feel free to get in contact with our team if you would like to be put in touch with a guide or ski instructor :p

6 Tips on how to start saving for your dream house – realistically!

Buying a home is an exciting milestone for anyone, but the process can be daunting, especially when it comes to saving for a deposit. The deposit is usually the largest upfront cost associated with buying a home, and many people struggle to come up with the funds needed to secure a mortgage. If you're new to home ownership and wondering how to start saving for a house deposit, here are some tips to help you get started.

1. Set a realistic savings goal

Before you start saving, it's important to set a realistic savings goal. Take some time to research the housing market in your area and find out how much properties cost. Once you have an idea of how much you'll need for a deposit, you can set a savings goal. Keep in mind that most lenders require a deposit of at least 5% of the property's value, but saving 10-20% is ideal.

2. Create a budget

To save for a deposit, you'll need to create a budget and stick to it. Start by listing all your income sources and your monthly expenses, including rent, bills, groceries, transportation, child care and any other necessary expenses. Once you have a clear picture of your finances, look for areas where you can cut back and redirect those funds towards your savings goal.

3. Open a dedicated savings account

To keep your savings separate from your other funds, it's a good idea to open a dedicated savings account. Look for an account that offers a competitive interest rate and doesn't charge fees. By keeping your savings in a separate account, you'll be less tempted to dip into it for other expenses.

4. Consider other sources of income

In addition to your regular income, consider other sources of income that can help you save for a deposit. For example, you could take on a side hustle, sell unwanted items, or rent out a spare room in your home. Every little bit helps, and these extra income streams can make a significant difference in reaching your savings goal.

5. Cut back on unnecessary expenses

Cutting back on unnecessary expenses is one of the most effective ways to save for a deposit. Do you really need 2 x coffees each day for $5 each??
Look for ways to reduce your spending, such as cooking at home instead of eating out, cancelling subscriptions you don't use. By making small changes to your lifestyle, you can save a significant amount of money over time.

6. Be patient!

Saving for a house deposit takes time, and it's important to be patient. Keep your goal in mind and stay focused on your budget and savings plan. It may take several years to save up enough for a deposit, but the end result is worth it.

What is LMI?

Aspiring home owners who are taking out a mortgage for the first time may have heard of Lenders Mortgage Insurance (LMI) but might not be entirely clear on what it is and how it works. In this blog post, we'll explain what LMI is and what it means for home buyers.

Lenders Mortgage Insurance (LMI) is a type of insurance that is designed to protect lenders in case a borrower defaults on their mortgage repayments. It is typically required by lenders when a borrower is taking out a mortgage and has a deposit of less than 20% of the property's value. LMI is a one-off payment that is paid by the borrower and is typically added to the mortgage amount.

The purpose of LMI is to reduce the risk for lenders when they are lending to borrowers with a lower deposit. It’s basically an insurance premium that you pay for.

If a borrower with a low deposit defaults on their mortgage, the lender may be unable to recover the full amount of the loan by selling the property. In this case, the LMI provider will pay the lender an amount to cover the shortfall.

It's important to note that LMI is not the same as mortgage protection insurance, which is designed to protect borrowers in case they are unable to make their mortgage repayments due to illness, injury, or job loss. Mortgage protection insurance is a separate policy that borrowers can choose to take out, and is not required by lenders.

While LMI is designed to protect lenders, it can also benefit borrowers. By allowing borrowers to take out a mortgage with a smaller deposit, LMI can help more people enter the property market. Without LMI, many people may be unable to purchase a home because they do not have a large enough deposit.

However, it's important to understand that LMI can be expensive. The cost of LMI can vary depending on factors such as the size of the deposit and the value of the property, but it can often add thousands to tens of thousands of dollars to the cost of a mortgage. It's also important to note that LMI is a one-off payment, and cannot be cancelled or refunded.

While LMI can help more people enter the property market, it can also be expensive, and borrowers should carefully consider the cost before deciding whether to take out LMI by borrowing above a 80% LVR.

The importance of seeing a financial planner when you are young.

Have you ever heard the phrase "time is money"? Well, when it comes to financial planning, this couldn't be more true. It's never too early to start planning for your financial future, and the longer you wait, the more you risk missing out on opportunities to grow your wealth and secure your financial well-being. That's why it's essential to see a financial planner when you're young and not leave it to late in life.

You might be thinking, "I'm young, I have plenty of time to figure this stuff out." But the truth is, the earlier you start, the better off you'll be. Time is your most valuable asset when it comes to investing. By starting early, you give your money more time to compound and grow, meaning you can potentially earn more over the long-term. So, if you want to retire comfortably and achieve your financial goals, it's important to start planning as soon as possible.

Now, you might be wondering what exactly a financial planner can do for you. Well, a financial planner is a professional who can help you create a personalized plan to achieve your financial goals. They can provide advice on saving, investing, budgeting, and more. They can also help you navigate complex financial situations, like paying off debt or saving for a down payment on a home.

Another benefit of seeing a financial planner when you're young is that they can help you avoid costly mistakes. It's easy to make financial mistakes when you're just starting out, like overspending or investing in the wrong things. A financial planner can help you avoid these mistakes and make smart decisions with your money.

But what if you're not young anymore? Is it too late to see a financial planner? Absolutely not! 
While it's always better to start early, it's never too late to take control of your finances. A financial planner can help you create a plan to achieve your financial goals, no matter what stage of life you're in. Whether you're in your 20s or your 60s, a financial planner can help you make the most of your money.

In fact, if you're getting close to retirement age, it's especially important to see a financial planner. Retirement planning can be complex, and you want to make sure you have a plan in place that will allow you to retire comfortably. A financial planner can help you navigate the various retirement options available, such as how to manage your Superannuation, and make the best decisions for your unique situation.

So, whether you're just starting out or getting ready to retire, don't wait any longer to see a financial planner. By taking control of your finances now, you can create a brighter financial future for yourself and your loved ones. Remember, time is money, and the earlier you start, the more you'll have to work with.