First Home Buyers

Saving Your Deposit

Surging house prices in recent years have made the size of the deposit required for most home buyers substantially larger and just that much harder to get together.

As a result buyers need to be shrewder when it comes to their saving and banking habits. There are two ways to save your deposit faster: save more or spend less.

It’s that simple.

Here are some ideas to get you started on the path of home ownership:

Work out your budget: The hardest thing about saving is doing it systematically.

You don’t mind putting your spare change in a jar each week but it’s very hard to motivate yourself to save for a deposit because it usually means giving up things that you like. The key is to budget sensibly by putting together a realistic savings plan that doesn’t compromise your family’s lifestyle too much.

Estimate your regular expenses: such as transport, groceries, lunches, childcare.

Don’t forget any debts, including credit cards, car loan or anything else that you have to make repayments on. The hardest part is identifying and cutting out unnecessary expenses. Work out what luxuries you enjoy that you can reasonably afford to give up.

Manage your debts: There is no doubting the convenience of credit cards when you are running a little short. They’re handy to use and accepted almost everywhere. But do you really need one? If so, how many are you using? And what about personal loans, car loans and interest-free purchases? Remember, you can’t save effectively if you are paying off debts. So cut down on those credit cards, consolidate your debts and do everything you can to become debt free.

Sort out your banking: It’s a commonly known, though rarely considered fact that most banks charge fees on most of their accounts. The most popular form of saving for first home buyers just starting out is to open up an at-call deposit account. These are available from most traditional lenders, such as banks, building societies and credit unions. The advantage of at-call accounts is that your money is available whenever you want it. Avoid putting your money away in just any bank account.

It’s great to choose an account that pays good interest, but there are other factors you should consider, such as account-keeping fees, transaction costs, when interest is
calculated and accessibility.

Make an appointment with Mrs. Mortgage today and get started on the road to your first home!

How many credit cards should you have?

Look through your wallet. How many credit cards do you count?

Have promises of better rates, perks and lower fees caused your wallet to overflow and your mailbox to be stuffed with hundreds of offers each month?

While most Australians carry between 2 and 5 credit cards, some people carry up to 10 - which could wreak havoc on your credit rating.

So, how many credit cards should you have?

Most experts say there's no single magic number. Rather, the question can be answered by scrutinizing how much you spend and how much you can pay off. But there is an upper limit: Credit agencies warn that the more cards you have, the bigger risk you carry for racking up debt and damaging your credit.

Some people go crazy at Christmas and open lots of store credit cards. Relatively speaking it is a good idea if you pay off the balance and close the card right away. If you don't, then you will be costing yourself more money in the long run when your credit rating isn't up to par.

Other credit authorities say that you should open a store credit card if it is a store that you shop frequently and recommends that you open no more than one favourite-store card.

The average person carries 11 "credit vehicles." Typically, seven are different types of cards and four are instalment loans for cars, furniture, student loans or mortgages. Some credit experts see people with 45 or more credit cards -- many of them are high-income earners.

A good rule of thumb is to keep two to six credit cards. Make sure the credit cards you have are Visa, MasterCard or American Express, because merchants will take almost any of them.

Try your best to pay them off, or if you ca 't pay them off, find a credit card that has a low interest rate to use for emergencies when you need new tyres or when your hot water system breaks. It's also a good idea that your other credit card has reward points or similar, something that gives you something back. That card doesn't have to have a low interest rate if you pay it off every month."

Another rule of thumb to remember is to keep your debt ratio under 50 percent. If your credit card has a $5,000 limit, don't carry a balance of more than $2,500.

Keep credit purchases under 50 percent of the credit limit. (If you have a) $5,000 limit -- and you want to buy a $4,000 furniture set -- split the purchase onto two cards, creditors don't like to see a card almost maxed out; they look at you as a risk, someone who is using too much credit and has trouble paying off debt.

By following these simple rules you should keep your credit rating good, thereby achieving the best chance possible of qualifying for a home loan at affordable rates.

If you are still not sure, or think that you will qualify for a home loan today, give Mrs. Mortgage a call and get all your questions answered.

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