Coming up with a deposit for your first property can be a slog.
With banks particularly cautious in this post-global financial crisis lending climate, buyers often need access to funds worth 10%-20% of the home purchase price to convince a lender to chip in the rest.
And that means some serious moolah.
Findings from the latest realestate.com.au Housing Sentiment and Affordability Index (HASI) shows more than half Australians start saving for their first large purchase – such as a car, a house or a holiday – before they turn 25.
The research also shows Australians are willing to sacrifice or cut spending on recreational vehicles, luxury items and car upgrades to help pay for a property.
Read more: HASI: national housing sentiment 2014
But how do you do it?
We figure some of the best people to ask are those who’ve done it all before.
So we polled some folks from all parts of the property world and asked: how did you save your first home deposit?
How did you save your first home deposit?
Read more: Is your home deposit under 20%?
How the experts how saved their first home deposit
The property transfer expert
Suzi Cheeseworth, from KRG Conveyancing on the Gold Coast, got serious about saving a home deposit after returning home to Australia from a working holiday.
“I first started to save when my partner and I moved back from the UK after spending a number of years doing the customary Aussie work and travel adventure,” she says.
“Having nowhere to live, we decided to move in with my mother, and soon realised this created the perfect environment for saving for a deposit.”
Cheeseworth and her partner “pooled our resources” and saved about $12,000 in 10 months.
This lump sum, coupled with the first home owner’s grant, got the pair “across the line”.
They bought a town house in the northern Gold Coast suburb of Coomera in 2010.
“Fast track four years and we have now upgraded to our dream house, for the time being.”
Read more: How conveyancing works
The real estate agent
Craig Bennie, Director/Auctioneer at Ray White Rosebud in Victoria, first bought vacant land in Point Cook, 25km southwest of Melbourne. He paid $160,000 and later built his home on it.
His story is unique because he funded his all-important purchase deposit by selling a parcel of shares he owned in Oxiana (now Oz Minerals).
The shares grew from 9 cents each to 95 cents “and I had 50,000 of them”, Bennie recalls.
“With that money I bought a block of land and built a brand new Metricon home, my first home and I lived there 2003 to 2008 then sold to move down to the Mornington Peninsula,” he says.
“My plan was always to use the money (in my shares) to buy real estate but in hindsight I would be a lot wealthier had I not sold the shares and had rented a home – by about $400,000.”
Alex Haig, Owner of UnEarthed Landscapes in Adelaide, says it took him two years to save the deposit of $30,000 for his first home.
He also qualified for the first home owner grant of $7000, so he could afford $180,000 for his “little bluestone cottage” about 50km outside Adelaide CBD.
“I put aside a certain percentage of my wage every week to save and worked some weekends to earn the extra money I needed to still enjoy life as well as save for my deposit,” he recalls.
“I was house hunting during the housing boom of 2004 so over nine months I missed out on a fair few properties and was forced to buy further out of town.”
Unperturbed, Haig spent four years renovating his house in his spare time before selling it for $380,000. “This gave me the extra funds required to buy a house closer to town.”
Read more: How to apply for a first home buyer grant
Catherine Gambrellis, CEO of Two Men and a Truck Australia, says her parents recognised early that without financial assistance their three daughters and partners would struggle to buy and service their first family homes in Sydney.
“They decided that instead of holding their wealth until their deaths they would provide each daughter with a significant deposit to purchase their first homes,” Gambrellis says.
“This allowed us all to buy homes that would have been financially unattainable and still be left with serviceable loan repayments with the added bonus of being able to buy properties close by.”
Gambrellis says she knows “I am not alone here”.
Many of her friends have had assistance from parents to buy their first homes.
“With prices continuing to rise I believe this will become the norm.”
Read more: Tips for moving house in the rain
originally posted on realestate.com.au