The 5 things you need to save for to buy a home

We’re all across the need to save for a deposit when it comes to buying a home, but what other bits and pieces are we going to need to have saved for before we go ahead with the home buying process? 

Here’s our round up of all you’ll need to save for when it comes to buying a home. 

Your deposit 

We’ll start with the obvious – you’ll need a deposit to bring your home owning dreams to life, but how substantial a deposit depends on the price of your home and how much you have the capacity to borrow. Usually saving 20% of purchase prices plus stamp duty and other related costs is a good idea and means you’ll have less to pay off over the years. Plus you’ll avoid having to pay lenders mortgage insurance. Factors like who you’re applying with, your employment circumstances and whether or not you have a guarantor can make the deposit requirement as low as 5%, however lenders mortgage insurance may become payable.

Bonus tip? When prepping to secure yourself a loan, use an online calculator and an estimate of what you may borrow to see what your mortgage repayments could potentially look like. This can help you prepare mentally and also ensure that the homes you’re looking at fit within your means and budget.

Stamp duty

Ahhh stamp duty - the tax we normally have to pay when we buy property. It’s important to note it’s not a set fee though - instead, the amount of stamp duty you have to pay will vary depending on the value of your property. The rules around stamp duty also vary from state to state so be sure to do your research to ensure you’re across the stamp duty laws that will apply to you. And of course, keep an eye out for any concessions state governments may have on offer for you (think first home buyer deals) as that can make entering the home buyer's market that bit more accessible. 

Purchase costs

Legal fees: These are the fees you’ll need to pay for working with a conveyancer or solicitor in the process of buying a home, and they’re estimated to cost around $1800 but this will fluctuate depending on where and what you’re buying.

Building & pest inspections: Estimated to cost around $600, pest and building inspections are important to make sure there aren’t any problems with the property that you or I wouldn’t be able to notice. If your home is older, this process is even more important.

Mortgage insurance:  Unless you have a deposit of 20% or more, most lenders will require you to pay lenders mortgage insurance - a type of mortgage insurance that protects banks if a customer can’t make their home loan repayments. The smaller your deposit, the higher that fee and vice versa. While it may seem frustrating or perhaps unnecessary, it allows buyers into the market with smaller deposits (as little as 5%) which some see as an advantage for getting their foot in the door of the property market sooner.

Not all lenders require 80 percent LVR to avoid LMI. UBank doesn’t charge LMI for LVR of up to 85 percent for approved owner-occupier loans paying principal and interest or interest only, subject to eligibility criteria. That means you can potentially buy a home with a 15 percent deposit and still avoid paying LMI.

Moving costs & furniture 

Another thing we don’t really think about is the price of moving all of our items into our new place, and the cost of the new furniture once we’re in there. Of course there are ways to save here - like recruiting family or friends with a truck or a trailer to help you move and making the most of second hand marketplaces to buy furniture and whitegoods -  but if you need the help of removalists and if you want to update some of your furniture or buy it new, then this will add a chunk to what you’ll need to save when it comes to buying your home. The good news is no one expects your house to be 100% Architectural Digest on day one (or ever really let’s be honest), so when it comes to furnishing your home, you can take your time and factor spends into your budget once you’re actually in.

Emergency buffer

It is super important to always have an emergency stash you can lean on should you need it - something to give you the peace of mind that if something goes wrong, be that you losing your job unexpectedly or you needing to fork out funds for an expensive car service, that you’re covered. While the amount that will bring you peace of mind will vary from the next person, it’s always a safe bet to shoot for a buffer that will cover you for about three months’ worth of living expenses.

A HUGE thank you to the legends at UBank who are helping us bring this season of the podcast (and this blog post!) to life! They’re helping Aussies get on the property ladder with great rates and award winning home loans.

Andddd for more property goodness, be sure to listen to our property podcast The Property Playbook!

Any advice in this blog has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this information, you should consider whether it is appropriate for your circumstances.

Information current as at 15/11/21 and subject to change. Terms, conditions, fees, charges, eligibility and lending criteria apply for all UBank products (available on request).

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