Buying your first home is a huge milestone and a valuable addition to your personal asset wealth. If you are considering your first home, consider a few statistics of the current housing market in Australia.

A survey by mortgage insurance provider Genworth in 2011 states that Australian first home buyers are six years older now than 40 years ago. For many reasons, Australians are waiting until their 30s to undertake major purchases which will result in larger debt – such as buying a home. The average age for buying a home is now 31 as opposed to 25 in the 1970s.

Once you have decided to plunge into the property market, affordability is the next consideration. Affordability is a huge limitation to younger generations entering the property market. Entry-level property prices have seen a large increase with the Australian Finance Group – Australia’s largest mortgage broker, stating the nation’s average mortgage size has increased from $402,000 in July 2013 to an increase of 10% to $443,000 in July 2014.

These are the facts facing those looking to enter the property market. As with any investment, there are pros and cons – and owning your own home can prove to be one of your best bets in terms of investment.

TIPS ON SAVING FOR YOUR FIRST HOME

  • Start early research in the property market in the area you wish to buy. Know what the average house price is and what the demand is in your area
  • Attend as many open homes and auctions as possible to get a feel for what you like, the quality of homes and the prices they are asking
  • Get to know your local real estate agents – call them regularly for any new homes coming on the market. Many sellers are open to negotiation before officially putting on the market to avoid additional advertising costs, open home interruptions etc.
  • Keep alert with fluctuations in the market. Housing markets rise and fall – you want to buy at the bottom of the cycle – not when prices are at their peak.
  • Keep an eye on the news (both local, national and international) and interest rate decisions for indications of where the market could be heading.
  • Start saving early! Cut down on your spending habits and live lean to try and save as much of a deposit as you can. The more deposit the less debt you will have.
  • Find a good mortgage broker or shop around the banks (big and little) for the best interest rates. Fixed rates are on the rise with 24% of homeowners fixing their rates in 2014 as opposed to just 5% in 2009. (Australian Finance Group)

 

ONCE YOU HAVE BOUGHT YOUR HOME

Congratulations! Owning your first home is a very rewarding purchase. Now you own your home, there are still many ways to save and work towards reducing your debt even further, quicker.

  • Throw any spare money into your mortgage. Even an extra $10 a week will go far added up over an average loan life of 25 years.
  • Review your loan regularly to ensure you’re receiving the best rates on offer. Negotiate with your bank – they won’t want to lose your business so haggle haggle haggle.
  • If you’re on a variable rate and rates go down by the RBA, if you can afford to keep paying your current rate, keep it as it is. Only reduce your payments with the fall in rate if required. The more you can pay off your loan the better.
  • If rates continue to fall, consider fixing your rate – or a combination of variable and fixed rate. This can give you the knowledge that your rate is locked in for a specific period of time, whist keeping some variable if needed.
  • Cut the excess. If your bank offers a package with additions you don’t need (such as redraw) cut it out. There may be hidden fees you are paying for additions you don’t need.