Title: “Saving For Your First Home”

Whyalla News, Sep 26, 2013.

Database: Newspaper Source Plus.

Building your savings:

Buying a house is exciting and life-changing. What's not as much fun is saving for the deposit.
But the more money you put down upfront, the less you'll have to borrow. There are many ways
to save for a home that do not require major changes to your lifestyle. With a good savings plan
and some discipline, you'll soon have that deposit for your home sweet home. How much do you
need to save?

First, get an idea of property prices in the area you want to buy; go to auctions, or regularly read
the property prices in the newspaper. The property market is always changing, so it's important
to know how much you should spend on a property in the area you like. Work out what you can
afford. Work out how much you can afford to spend on a deposit and your mortgage repayments.
Consider buying a cheaper house if it means your repayments will be easier.

Check your loan to value ratio: In thinking about how much to save, it is helpful to check your
loan to value ratio (LVR). This is a percentage that is calculated by dividing the amount of your
home loan by the purchase price (or appraised value) of the property you want to buy. Lenders
use your LVR to gauge how risky it would be to give you a loan. In general, the higher your
LVR, the higher the risk that you could have difficulty paying off the loan because of borrowing
a high percentage of the value of your property. You may also find it hard to refinance your
loan later on, because lenders take LVR into account when assessing a request to refinance. If
your LVR is above 80 percent, the lender will probably charge you lenders mortgage insurance
(LMI). This is a one-off insurance premium to protect the lender should you default on your
home loan. If you refinance your loan but your LVR remains above 80 percent, you may have
to buy LMI again which could wipe out any savings you make on interest.

Save until you're home sweet home: Develop a plan to help you save towards your deposit. Try
creating a savings plan by writing down your financial goals, such as when you want to buy your
house and how you are going to save to get there. Cut back on the extras. The easiest way to see
where you can cut back is by doing a budget. Write down your essential costs such as rent, bills
and food, and subtract this amount from your income (after tax). What is left over is what you
could potentially save for your deposit. Try to spend as little as possible on non-essential items
and put away all your spare money for the deposit. Give yourself some leeway - if your budget is
too tight, it is harder to reach your target. So don't cut out all your non-essential expenses.
A good idea is to set smaller savings goals along the way and reward yourself when you achieve
them such as reaching a smaller dollar amount and then going out for a nice dinner. Make the
most of what you save. Once you have worked out how much you can save, make your money
work for you. If you leave it in your everyday transaction account, you might be tempted to use
the cash. You will also earn less interest than you would with other accounts or options. Savings
accounts have a higher interest rate than transaction accounts. First home saver accounts: These
are specifically designed for first home buyers.

Invest your savings: Have you thought about investing your savings in shares and term deposits?
This is a good idea only if you plan to buy your home in five years or more. Buying a home is a
big step and it's easy to be daunted by the large sums of money involved. With careful budgeting,
saving money towards your own home is made much easier.

MLA:

"Saving for Your First Home." Whyalla News, 26 Sept. 2013: 9,

https://www.whyallanewsonline.com.au/. 25 Mar. 2014.

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However, users may print, download, or email articles for individual use. Source: Whyalla News,
Sep 26, 2013, p9

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