Buying your first home is a huge step – one that a lot of people aren’t sure they’re ready to take, or if it’s even within reach. We spoke to a recent first home buyer for his thoughts on the steps he took to reach this goal.
When you really became serious about buying a property, how long did it take you to find the right property?
We started to become serious about buying once the COVID-19 situation become apparent. Initially, we’d planned to travel to the UK and US at the end of 2020 and we’d made a savings goal and figured out how much money we’d require to do so. When the whole situation changed around March/April, we started tossing up the idea of purchasing a house as it became clear overseas travel would be off the cards for the foreseeable future. We started to look at house and land packages first in May/June and then in July and we started to look at established homes to get a feel for the market and what our money would get in different suburbs. Between considering properties and options to finding a house and signing a contract, the whole process took about seven months.
How did it take you to have enough funds set aside to know you could start looking at houses?
Our early days of looking were around the same time as the government’s $25k home builder announcement. Combined with the $15k first home owner’s grant we figured out we didn’t require as much money as we’d initially thought. However, after comparing the new build option and established homes, we decided we wanted to go for an established home. At the time, we didn’t actually have the funds available to purchase an established home in the budget we’d set out, based on the cost and house we wanted. For us to have the funds available when we signed a contract in December 2020, we actually used a small loan from our parents to get us over the line initially.
We had most of the funds available about a month from when we signed a contract, so it took us a majority of the year to save the deposit and then we took the loan from our parents to ensure we could get into the market and to cover some of the fees such as Stamp Duty. We have a budget and plan in place to pay this money back within 12 months of settlement. Our decision to ask our parents for the loan was influenced a lot by the market and some of the feedback we’d been given regarding house prices in the near future so this meant making sure we were in sooner rather than later.
Consciously what did you both have to sacrifice over this period while saving money for a house?
We were quite lucky in a sense because COVID had shut everything down and we had gotten to a stage where we actually weren’t spending a lot of money and were saving quite a bit. I think we would have had to make more sacrifices if we were living our usual life throughout the year but we were fortunate to be in a position to be saving more than normal. With this in mind, as we approached the end of the year and we knew we were serious about buying, we started to limit any holidays and we actually shortened a planned trip we had at the end of the year to save some extra cash for our house. We had also taken steps like limiting takeaway to maybe 1-2 times on a weekend. We tried to limit the times we spent meeting friends out in bars or restaurants, and opted to do more things at our own place or at other people’s houses. We also started to become a lot more conscious of finding better deals on groceries and any items we needed to purchase rather than just swiping the card without considering any better options.
Did you realise how hard it was to save enough money to buy a house, or did you find it easy?
Once we figured out what the up-front costs and price to purchase was, we found it quite difficult to ensure this money was available towards the end. We had Christmas coming up and we had to budget quite hard to ensure money was available purely for the house and the fees and deposit required. For most of November and December, our savings went entirely into our house fund so we essentially sacrificed increasing personal savings for the goal of purchasing a house. In hindsight this was a good option as we’d been saving for a house for most of the year anyway, but it was financially stressful when it became 100% about the house. We had to really simplify our budget and make effective and smarter choices for things such as Christmas shopping and the events and outings that happen during the festive period.
What did you change about your banking methods over the period you were saving for the house?
We started working together more and combined our banking in a way we could both see our house account. This made us both more accountable for our choices. When we decided to buy a house and we saw some of our friends do the same thing and we learnt about the process. It started to make us naturally more conscious with our money. This was mainly due to us wanting to do this sooner rather than later. I also personally set up a Raiz account and for both my Bank account and Raiz account I set up automatic round-ups to boost savings. It was only a small amount each time but over the year it definitely added up and helped achieve our goal.
What excites you most about buying a house?
After working so hard to find a house and going through the emotional ups and downs of the process, finally being in a property excites me. This time last year I never thought I’d be able to say I’ve signed a contract on a house and it was always a distant goal that I thought would just eventually happen. But I did realise you need to be clear about a strategy of what you want and you need to take initiative to make it happen by deciding how much you want to spend and how much you can afford. I do feel as though it is a lot easier to achieve than one might think. I personally went through this and we realised very quickly we could actually buy a house in the near future without having to spend years and years saving. With interest rates so low and banks offering products to help first home buyers, it was a unique opportunity for us to enter the market. I’m also just happy it means we don’t have to move anywhere anytime soon due to leases finishing and we are able to build on what we’ve got and renovate and really turn it into something special created by us.
What advice/tips would you give other first home buyers that think buying a property is intangible and out of reach for them?
Based on my own experience I think being realistic is the first piece of advice I would give. I know for me, once we realised what we could and couldn’t afford it started to take shape for us. We could make better judgments about our own financial situation and what our strategy was in regards to what we wanted to buy. There were suburbs and houses that I prefer over where we bought, but I know that we made a smart decision in the sense that we get to enjoy the benefits of living in a house without putting us under immense financial pressure. We’ll still be in a relatively comfortable and safe position even with any changes in the future such as if one of us was unable to work or when we want to start a family where there’d be maternity leave. We were told by many different people in our lives like our parents, friends and family that your first home really isn’t your forever home. In the early stages of looking I was brushing this off and not buying into it but once I started to realise and come to terms with what that actually meant – that this first purchase was basically the doorway to other opportunities down the track, – it made the goal of having a house more tangible. We realised what was possible and provided a clear goal for us.