Worried about a house deposit? Don't look through all your bills at the one time.
We’ve heard so much lately about property prices being so on fire right now – great news if you already own a place, a nightmare if you’re trying to crack into a market that’s so hot right now it’ll burn you if you try to get a hand on it. Anybody see that derelict house at auction yesterday in inner city Sydney fetch more than $800K? Really?! Give me a break.
And the biggest problem right off the top in an expensive market for a first home buyer is not rising interest rates – although that’s got the potential to be really tough down the line – but scraping together enough of a deposit to satisfy the lender. Enough to get over the magic loan-to-value ratio. Enough to keep the mortgage insurance monster at bay. (Never pay mortgage insurance by the way, ever. It doesn’t actually insure you, it just sucks).
Seriously, saving the kind of cash you need to put a decent whack down on your first place is a big ask. If you’re an average earner, saving 10% of your net income each and every week, it’d take you more than 3 years to squirrel away enough to money for a deposit. And it’s kind of tough to hear that your friends got their deposit from a very generous mum, dad, or grandparent, when you’re still sweating away week-to-week.
Getting a chunk of money together without spending it is hard. Real hard. It doesn’t matter if you’re saving for a car, a holiday, or a house, putting away a decent sum each payday, deciding where it’ll earn the best interest, and then not touching it when you want to buy something fun instead (read: shoes) is sometimes just too much of a test of our spending willpower.
So, is a deposit even do-able? Or should we make like the Parisians and Manhattanites and merrily throw our home ownership dreams to the wind, renting forever because even with the Government’s assistance, the deposit’s still so out of reach?
Nope. That’s not Aussie. We want to own a place. We kind of like the savings struggle, then the regular mortgage repayment that makes us believe we’re not ‘throwing away’ our ‘dead’ rent money. We even like to moan about it with our friends.
Mortgage Moaning isn’t new. But Deposit Desperation is a sure sign that the sheer size of the deposit that’s now needed is getting further and further out of the reach of us Normals. And that means saving more every pay, for longer, to reach that elusive target. In a rising interest rates medium term future. I know, gloomy. Sorry about that.