Unless you’re one of the lucky few with access to a burgeoning bank account, it’s likely the journey to financing your first home will take a little while. Most first-time buyers in Sydney spend 5-6 years saving for a deposit, although 8 years or more is not unheard of.

But don’t let that put you off. With a good savings strategy and a clear target, saving for your first home can be painless – with a big payoff at the end.

In this guide, we’ll take you through:

  • Financing your first home
  • Saving for a deposit
  • Rebates, concessions, and tax help
  • Savings tips

Financing your first home: What you need to save

Most people know you need a deposit to secure a mortgage, but what are the other costs you should be saving for? As well as the deposit (ranging between 5% and 20% of the total price) you will also need to account for:

  • Lenders Mortgage Insurance (LMI, see more below)
  • Pre-purchase inspections
  • Conveyancer (settlement agent) fees
  • Stamp duty (unless you are eligible for a reduction)
  • Home and contents insurance
  • Mortgage registration and application fees
  • Moving costs, furniture and incidentals

All in, the upfront costs of buying your first may add 7-10% to the total costs. This depends, however, on your eligibility for the rebates and concessions below.

How much do you need for a deposit?

Most people aim for a 20% deposit to avoid paying LMI, although some financial institutions may give you a loan with as little as 5% upfront. LMI can add thousands over the life of the loan, so if possible, it is worth saving a little more.

  • For a unit at Sydney’s median price of $647,000, a 20% deposit is $129,400.
  • For a house at Sydney’s median price of $785,000, a 20% deposit is $157,000.

Rebates and concessions

Saving for your first home may seem daunting but remember there are several concessions and rebates available to knock thousands off the all-in figure before you even put down a deposit.

Housing Affordability Strategy

Introduced in 2017, the Housing Affordability Strategy reduces stamp duty on homes under $800,000, abolishing it entirely for homes under $650,000. There are other relief measures which, all together, have amounted to more than $1 billion in savings for first home buyers.

First Home Owners Grant (FHOG)

In addition to stamp duty reductions, first home buyers purchasing a new home are entitled to $10,000 if the purchase price is under $750,000 (and they meet all the requirements). Combined with the Housing Affordability Strategy, FHOG means you could save almost $25,000 on a new home.

HomeBuilder grant

To stimulate the economy after coronavirus gave it a knock, the Government offered an additional $25,000 to homeowners signing construction contracts in the second half of 2020. This effectively doubles the potential savings to nearly $50,000 for first home buyers ready to build.

Top saving tips to help with financing your first home

Saving for your first home requires a good plan and a fair bit of discipline, but it shouldn’t mean compromising on being able to live your life. Here are a few tips for saving a 20% deposit:

  • Set a budget and stick to it
  • Detail all your daily expenses and find ways to cut costs
  • Set incremental savings targets; weekly, monthly, quarterly
  • Do your research on high-interest savings accounts
  • Separate your savings account so you’re not tempted to dip in
  • Ask others (partner, parents, friends) to check in on your savings goal
  • Use the First Home Super Saver Scheme to squirrel more away

Financing your first home is one of the most worthwhile savings exercises you will ever undertake. Once you get the keys to your new Kurmond Complete home, you will realise the small sacrifices made along the way (smashed avo, anyone?) were well worth it.

Get in touch to discuss our pricing arrangements and start a conversation so we can help you get into your first home sooner.

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