Own your dream home sooner

We all want to be sure that our home is somewhere we can feel safe. Part of that is having the sense of financial security by owning where you live and being able to plan a future there.

Owning your dream home may seem like a lifetime away, but you may be surprised that with the right strategies, smart planning and plenty of motivation, you could be celebrating sooner than you think.

Start with the basics

There are a few simple steps you can take now, that will lead you to your goal. For a start, sit down and list all your income and expenses on a budgeting spreadsheet like AMP’s budgeting calculator located at www.amp.com.au.

This will give you a budget that can help to identify possible savings – really ask yourself what are key needs, such as groceries, and what are luxuries that could be cut. You may well discover that you have more disposal income than you thought.

The next step is to consider a high interest savings account to put that spare cash within. Online savings accounts and term deposits can offer competitive rates. A good practice is to have part of your salary directly transferred to this savings account. After a while, you won’t even miss it.

While you’re saving, you can also be researching mortgage products, looking at what you can afford and the property market, so you don’t undo years of savings by making the wrong purchase.

What if you’re a first time buyer?

Don’t forget to consider opening a First Home Saver Account. This government initiative gives you concessional taxation on earnings (15%), plus Government contributions to your savings. For more details, simply go to www.ato.gov.au or call us today.

If it is a first home you are buying you should aim to save at least a 20% deposit, as you will incur other expenses such as legal fees, moving costs, etc. And if you borrow more than 80% of the property value, you will have to pay mortgage insurance, so the bigger your deposit, the better.

Another option to maximise your money is to invest in a managed fund. If you have a time frame of 5 years or more, consider buying shares, managed funds or investment bonds. If you’re considering this type of investment remember to call us to ensure you select an investment vehicle that best suits your particular circumstances.

Case study: Alan and Susanna Morris

Alan and Susanna got together in their mid-20s, and agreed early on that owning their home to bring up a family in was a priority, so they started saving immediately.

As they were planning to have children, they decided to focus on buying a larger and more expensive house that they could live in until their family grew up. After looking at some properties, they worked out their deposit needed to be around $50,000-$60,000.

Alan quickly did a budget which showed them where all their unnecessary expenses were. Trimming their ‘lifestyle’ but not losing all of the things they enjoyed doing together, meant they could save an extra $200 a week.

They then opened two joint accounts:  an online saver and a managed investment fund. To begin with, they put $100 per week into the online saver, which offered good interest, security and access if they really needed the funds, although they were determined to use it only in an emergency. They began their managed investment fund with a $5,000 investment in Australian shares, adding a further $300 per month.

Over time, as their salaries increased, the couple were able to contribute more to their savings and investments. They were also diligent about adding any ‘windfalls’ such as tax refunds.

After four years of careful and regular saving, Alan and Susanna were able to buy the perfect property for their future family — and with their habit of strong money management, they’re confident they’ll be able to pay off their mortgage in good time too.

Want more information?

Of course everyone’s circumstances are different, so to see how you can own your dream home sooner, please call us today.

What you need to know
Information current as at May 2011.  This article contains general information only. It does not take into account your objectives, financial situation or needs. Please consider the appropriateness of the information in light of your personal circumstances.  If you decide to purchase or vary a financial product, your financial planner, our practice, AMP Financial Planning and other companies within the AMP Group will receive fees and other benefits, which will be a percentage of the premium you pay and/or the advice fee you agree with us.  Further details are available from your planner or AMP Financial Planning Pty Limited, telephone 1300 157 173.