4 ways to reach your first home finish line

29 October 2015
Saving up for that first home isn’t easy – especially during these days of unreasonably high house prices. ME Bank Head of Home Loans Patrick Nolan has four tips to share with you to help beat first home buyer fatigue.

If you’re saving for your first home, the current period of low interest rates might have been driving you towards getting that mortgage sooner rather than later. You were doing so well – working hard for the money and avoiding many expensive temptations – until you heard last week’s decisions by all of the big four banks to raise their variable home loan rates. This may have left you feeling as if you missed the chance to get a good rate – giving you an excuse to give up.

Don’t let the recent rate increases derail your ambitions. There are at least 100 other lenders out there to choose from with different rates – some of these lenders are even considering lowering their rates to be more competitive. Here are the current highest, lowest and average home loan rates:

Standard Variable Package Variable 2 Year Fixed 3 Year Fixed 5 Year Fixed
Average 4.82% 4.56% 4.46% 4.52% 4.83%
Min 3.88% 3.99% 3.69% 3.89% 4.24%
Max 6.12% 5.12% 5.74% 5.74% 6.04%
Source: www.canstar.com.au, the search results do not include all home loan providers, and may not include all features relevant to you.

So now is still the best time to be saving up for your first home. But, as ME Head of Home Loans Patrick Nolan describes it, “saving for a first home can feel like running a marathon, and as any distance runner knows, at some stage you could hit the wall of fatigue”.

“In running terms that’s the point where energy levels start to drop and athletes have to fight the urge to toss in the towel and head back to the change rooms,” Nolan said.

“If you find your enthusiasm for growing savings is starting to flag, it can pay to adopt the strategies used by professional runners to forge ahead even when the wall tries to slow them down.”

Here are the four strategies Nolan suggests savers should adopt to keep them running on track towards their first home finish line.

“Keep a consistent pace”

When saving, you need to do it steadily. Don’t push yourself to extremes as you’ll run out of motivation very quickly. Nolan says you should still try to enjoy your life and not restrict yourself from meeting up with friends, going away for holidays or going out on the town occasionally.

“Throwing as much cash as possible into your savings without allowing for fun stuff is a sure fire way to burn out,” he says.

“Aiming to stick to a consistent pace of saving can help you avoid saving fatigue.

“Crunch the numbers to work out how much you need to save on a regular basis to reach your first home deposit target.

“Once you have the numbers in place it’s just a matter of maintaining the momentum.”

“Fuel your head space”

Nolan suggests that like marathon runners who visualise themselves crossing the finish line first or breaking a record, first home savers can visualise their new house to keep them going.

“If your enthusiasm for savings is flagging, stay motivated by picturing how great it’s going to feel to look at your home and think ‘Yep, I own that’,” he says.

“Sure, you may not win a gold medal but remember, your home is a tax-free asset and an excellent investment.

“Buying your first home could certainly put you on top of the winner’s podium when it comes to growing personal wealth.”

“Run your own race”

Unfortunately, we can’t all afford to live in the nicest suburbs – even if our friends, family and workmates can. Nolan says you should run your own race and not feel pressured to buy in expensive suburbs.

“There is value to be found in suburbs further out from the city centre,” he says.

“These may not be your dream location but sometimes homes in outer suburbs can benefit from renovations, and that makes them affordable – and they offer a blank canvas for you to add value through improvements.”

“Carb stack your savings”

Maintaining the marathon runner analogy, Nolan relates first home savers seeking the best growth for their savings to marathon runners fuelling up on carbohydrates before a big race. While there are a variety of ways to invest, Nolan suggests utilising online savings accounts with bonus rates.

“Online savings accounts can offer higher interest than everyday transaction accounts but if you’ve had your existing account for a while check to see what your money is earning – a high introductory rate may have lapsed,” he says.

“Explore options to earn bonus rates, like holding your everyday account and savings account with the same bank.

“It all helps you smash through the wall of fatigue and hit the finish line a whole lot sooner.”

You can compare savings accounts here to find who’s offering the best bonus rates. Also, use our Home Loan Borrowing Power Calculator to see how much you can actually borrow at today’s rates.


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