Single and want to become a home owner? How to realise the dream

Lead time

The time it takes to save a deposit will obviously be influenced by your income and the type of property you want to buy. I recommend setting goals two to five years out. If going without an annual holiday away overseas, for example, is a sacrifice you can’t entertain, then accept that it will take you longer to be cashed up for the property market.

Be realistic

It worries me that so many first home buyers want a “palace” rather than something smaller and more affordable and take on a massive mortgage as a result. As a single, do you really need four bedrooms, three bathrooms, a multimedia room and a pool when a two-bedroom two-bathroom unit may meet your needs for now (and offer opportunity to rent out the spare bedroom, helping to smash mortgage repayments? Remember, this doesn’t have to be our forever home.

Super saver

The federal government’s First Home Super Saver Scheme allows you to save money for your first home inside your superannuation fund. Do investigate what’s offered, read the fine print, and seek expert advice. It could be your once in a lifetime opportunity. Details at www.ato.gov.au

Save and live

A realistic spending and investment plan is an essential part of your financial house’s foundations (along with insurances, superannuation, estate planning and an emergency fund). Your spending and investment plan will guide your home deposit savings and mortgage repayments. Accept that there are everyday living expenses that you can’t get away from – like basic groceries, electricity, phone, rent – and you still need to live, not simply exist. Discretionary spending is where choice really comes into play.

Some suggestions include:

• Move home (but still pay your parents some board).
• Use public transport or ride a bicycle.
• Don’t smoke. Cigarettes are expensive and smoking adds a loading onto your insurance premiums (TPD, life, income protection and trauma). One client saved $20,000 a year by quitting.
• Never grocery shop when hungry. You are more likely to impulse buy. An extra $20 a week is about $1,000 a year.
• Eat last night’s leftovers for lunch twice a week instead of buying a drink and a wrap and you can save around $1,500 a year.
• Buy 30-pack cartons of soft drink when on special and keep them at work for when you’re thirsty. I save nearly $1,000 a year with this practice.
• Insure your biggest asset. You – not the home you want to purchase – are your biggest asset. Protect your earning potential (and your investments) by seeking advice about appropriate personal insurances. Some personal insurance can be paid through superannuation, so cash flow won’t be affected.
• Don’t fall for mortgage insurance. It compensates lenders (the bank) if there’s a mortgage loan default, not you as the mortgagee. Banks charge if your deposit is under 20 per cent and can cost thousands – and that’s thousands you can better use towards your home.

When buying a home, gather around an expert support team, including a financial adviser, mortgage broker, conveyancing lawyer and general insurance broker. Like anything that you do in life, saving for a home deposit is about making decisions and choices. Is this really important to you? Are you willing to make a sacrifice in some other areas to attain more than a roof over your head: an asset!

Helen Baker is a licensed Australian financial adviser and author of two books: On Your Own Two Feet – Steady Steps to Women’s Financial Independence, and On Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide.