It’s common for couples to experience an instinctive need to nest when they are expecting their first child. This could just mean relocating from your current rental into something bigger and more practical. However, for many it means embracing this next stage of adulthood and deciding the time has come to buy their first home. The idea of this can be tricky to execute though when you know that once the baby arrives you will be a single income household. Saving for the deposit during the pregnancy is a great idea while there are still two incomes available, but if you have not managed to get the timing right on that, there are still plenty of ways to save a deposit and be able to manage a mortgage on one income. You will need patience, dedication and a powerful calculator though for all that number crunching.
1. Know your savings goal
Ideally you will have researched the property market and have a rough idea of what your overall spend will be on a property. This will be partly determined by what the current market values of the kind of property you want are, combined with the maximum amount that you can afford. A deposit can vary from between 5% and 20% of the purchase price of the property, depending on your personal circumstances and the kind of financing you can get approved for. Shopping around for loans will give you a good sense of your financial position in the eyes of lenders and allow you to set realistic savings goals for your deposit and into the future for mortgage repayments.
In addition to the deposit, you will also need to cover stamp duty, fees for building and pest inspections and possibly mortgage insurance. Factor these costs into your savings goal and set a realistic time frame for when you think you can achieve that goal and have a deposit ready to go. Again – if you can start saving during the pregnancy, while both of you are still working, you will make some headway on your goal and get there a little faster. It’s also a good idea if possible to try to save the equivalent of what you expect your mortgage payments to be. This you will not only save your deposit quickly but also help you to establish a routine of making mortgage payments. Once you have bought the property, you can seamlessly integrate those payments into your budget, then the rent money you were paying previously will become bonus money to either add onto the mortgage payments, or to be used for furniture and all the expenses that come with a new home and a new baby.
2. Reduce your overall debt and boost your resources
Once you know how much you want to save you will need a solid budget to make sure you funnel all available cash possible into your savings plan. If you are drowning in debt this will be very challenging, so dealing with your current debt load should be your first priority. See if there are options to consolidate debts in anyway, or take out a personal loan to clear all the individual debts, leaving you with just one regular payment to factor into your budget.
Once you have done that and got yourself all down in the dumps, start to look into what government grants and incentives you might be eligible for. The First Home Owner Grant website leads you to detailed information about each state’s grants programs, eligibility requirements and how to apply. You should also look into ways to maximise the money you do have. From shopping vouchers to switching to a higher interest earning savings account, every little bit counts and the smarter you are with your money, the faster you will reach your savings goal.
3. Write and commit to a kick ass budget
So, you know your savings goal, you have consolidated and reduced your debt wherever possible and you have a good interest rate on your savings account to give you some bonus dollars. Now you can start to detail one by one all the sources of income in your life and every little expense you currently have. Start with your essentials such as rent, food, bills and your monthly savings goals, then add all the other incidentals. A simple spreadsheet will do a great job to tally your income (including wages, interest earned, grants payments etc) and your expenses (including cost of living, debt and savings). If the balance column is at minus you need to either earn more or spend less – that’s budgeting 101 people!
Try some savings hacks and ask yourself questions honestly, or get someone you trust to go through it with you and ask you if you really need certain expenses. You can actually do without a few coffees a week for example. You could pause your gym membership for 6 to 12 months and just walk locally, ride a bike or use public equipment in your local park. Catching public transport instead of driving will reduce petrol costs and you should definitely cut back on incidentals such as takeaway food and spontaneous purchases. If the numbers don’t work you may need to move to somewhere cheaper or even move back home with your parents, if that’s an option. You will need to keep crunching numbers until your expenses figure is less than or matches your income figure. Then you can challenge yourself to beat your budget from week to week and spend less than you planned to, or just stay on track and see your savings grow.
Stay with us; remember you only need to adjust your budget for the short term and reducing your costs wherever possible will get you to your savings goal faster, which means less time on a bread and water lifestyle. Of course, you may still be paying rent, so estimating mortgage payments on top of rent will be frightening but don’t lose sight of the big picture. Remember it’s not forever, it is just for this period of time to get you to the next stage of your financial goals.
DISCLAIMER: The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions.