With interest rates lower than ever and house prices expected to fall, now is a great time to think about buying a property.
Properties that may have been just out of reach pre-pandemic are becoming more accessible as prices start falling in some capital cities. While it’s too early to tell the extent of the impact on the housing market, many experts will agree that now presents a rare opportunity for homebuyers to get into the market.
If you’ve been thinking about entering the market, here’s some tips on how to save for a house deposit during the COVID-19 pandemic.
1. Review what you aren’t spending money on
With COVID lockdowns forcing many of us to stay at home, you probably aren’t spending any money on certain things such as takeaway coffees, public transport to work or holidays anymore. Rather than finding something else to spend that money on, it could be a good idea to put that money into your house deposit savings instead.
2. Reevaluate what you’re willing to sacrifice
The coronavirus lockdowns have forced many of us to sacrifice things we’d normally spend money on, like eating out, going on holidays, and even major life events like weddings.
With lockdown restrictions easing in some parts of the country, consider if you can continue sacrificing little luxuries like eating out and going to the movies. You’ll be doing your bit to stop the spread and saving extra money for a house deposit, so it’s a win-win.
You may also want to consider sacrificing other things you’ve been spending more money on while in isolation, such as takeaway food or streaming services and put that money towards your home loan deposit instead.
3. Take advantage of government subsidies
If you’re a first home buyer saving up for a house deposit, it’s definitely worth taking advantage of the government grants and schemes available.
Recent research found that 80% of first home buyers were unaware of the First Home Loan Deposit Scheme (FHLDS) while 32% were unaware of other first home buyer government schemes.
These include the First Home Super Saver Scheme (FHSSS) which allows you to make tax-free contributions of up to $15,000 per year to your super, up to a maximum of $30,000. If you’re buying a house with your partner, you could be withdrawing up to $60,000 to put towards your house deposit.
There’s also the First Home Owners Grant (FHOG) which varies by state, so it’s worth investigating what support is available in your state or territory.
4. Shop around for low interest rates
Thanks to the last five cash rate cuts by the Reserve Bank of Australia (RBA) interest rates have never been this low, so it’s worth your while to shop around for the best rate.
Your interest rate determines how much your monthly mortgage repayments will be, so the lower the interest rate is, the better.
loans.com.au also recently launched a new home loan product with rates below 2%. More information on our new Smart Booster Home Loan here.
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