How Australians can use stimulus cash to save for their house deposits
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A money expert has said 2021 is the ideal year for first home buyers to make the most of government stimulus measures to purchase their dream house. If you have any sort of questions relating to where and just how to utilize mortgage, you can call us at the web site.
Max Phelps, a money coach and best selling author of the FIVE 2 Money Diet, said the current housing market, while competitive, has a number of opportunities for those looking to own their own home.
'For a lot of Australians, paying down the mortgage is currently their largest financial goal. Honestly, I have had a lot of sideways looks when I have said this - but it is 100 per cent possible for most people to pay it down in half the time,' Phelps said.
Money expert Max Phelps said 2021 is an ideal oppourtunity for those wanting to save for a house deposit or pay off their mortgage quicker (stock image)
One of his main tips is to use money saved by working remotely or cutting down on social expenses to put towards you mortgage (file image)
In 2020, in an effort to prop up the economy amid lockdowns and travel bans, the Reserve Bank reduced interest rates to record lows of 0.1 per cent - meaning amerisave mortage repayments are smaller than ever.
Mr Phelps advises people can use this to their advantage by paying more than what is required - thus cutting years off your amerisave mortage.
He said a figure as drastic as doubling your mortgage repayments isn't necessary - and advises adding two-thirds is the best strategy.
'To break this down, a $500,000 dollar loan at three percent over 30 years has repayments of around $2,100 per month. Two thirds of this is $1400 per month, so you would need to pay just under $3,500 per month to pay it off in 15 years, assuming constant interest rates.'
In addition, many states and territories in Australia offer first home buyer grants to allow those saving for a house deposit to get there quicker.
The NSW government, for example offers a first home owner's grant of $10,000 for those who are buying or building a new house.
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To be eligible your home must have a value of less than $600,000 and your house and land a value of less than $750,000 combined.
Also between August 1 2020 and July 31 2021, the NSW government will either completely waive or mortgage payment calculator reduce transfer duty for first home buyers - saving them tens of thousands of dollars.
Mr Phelps also has some tips for how Aussies can find some extra cash to either save for a house deposit or swing towards their existing mortgage.
His first tip for those shopping around for a loan is to not borrow an unreasonable amount.
'Banks will often offer to lend you six to seven times your income, but unless you're expecting big pay rises, or a partner returning to work, you'll be very stretched.'
'At Golden Eggs we have found that people typically spend 30 percent of their income on rent or a mortgage, and also that most people can save 20 percent of their income, if they budget properly.'
His second tip is to control your expenses - and with many people working remotely and curbing their social outings at the moment this is an excellent way to find more cash to put towards repayments.
He also advised when applying for a loan to not go too out of your depth as paying off your mortgage quicker was the better option (stock image)
Money saved on public transport, nights out at the pub, petrol, and work lunches can add up really quickly - cutting down on alcohol can save you thousands a year.
His last tip is to try and find extra income and with crowd-sharing apps this can also be done quite easily.
Renting out a room, doing jobs for people on apps such as Airtasker, or even casual work can provide some extra revenue to be mortgage free.
'I receive a lot of questions from people asking what to do if interest rates go up. Interest rates are really low right now and five year fixed rates of three percent give us the indication that they are not likely to rise any time soon,' Mr Phelps said.
'The key to success is always to borrow within safe limits, maximise income, control expenses and put around half your income towards paying off your loan.'
Covid-19
Max Phelps, a money coach and best selling author of the FIVE 2 Money Diet, said the current housing market, while competitive, has a number of opportunities for those looking to own their own home.
'For a lot of Australians, paying down the mortgage is currently their largest financial goal. Honestly, I have had a lot of sideways looks when I have said this - but it is 100 per cent possible for most people to pay it down in half the time,' Phelps said.
Money expert Max Phelps said 2021 is an ideal oppourtunity for those wanting to save for a house deposit or pay off their mortgage quicker (stock image)
One of his main tips is to use money saved by working remotely or cutting down on social expenses to put towards you mortgage (file image)
In 2020, in an effort to prop up the economy amid lockdowns and travel bans, the Reserve Bank reduced interest rates to record lows of 0.1 per cent - meaning amerisave mortage repayments are smaller than ever.
Mr Phelps advises people can use this to their advantage by paying more than what is required - thus cutting years off your amerisave mortage.
He said a figure as drastic as doubling your mortgage repayments isn't necessary - and advises adding two-thirds is the best strategy.
'To break this down, a $500,000 dollar loan at three percent over 30 years has repayments of around $2,100 per month. Two thirds of this is $1400 per month, so you would need to pay just under $3,500 per month to pay it off in 15 years, assuming constant interest rates.'
In addition, many states and territories in Australia offer first home buyer grants to allow those saving for a house deposit to get there quicker.
The NSW government, for example offers a first home owner's grant of $10,000 for those who are buying or building a new house.
RELATED ARTICLES
Previous
1
Next
Savvy couple share how they transformed their kids' toy room... Inside the fairytale Tuscan villa hidden in the Australian...
Share this article
Share
To be eligible your home must have a value of less than $600,000 and your house and land a value of less than $750,000 combined.
Also between August 1 2020 and July 31 2021, the NSW government will either completely waive or mortgage payment calculator reduce transfer duty for first home buyers - saving them tens of thousands of dollars.
Mr Phelps also has some tips for how Aussies can find some extra cash to either save for a house deposit or swing towards their existing mortgage.
His first tip for those shopping around for a loan is to not borrow an unreasonable amount.
'Banks will often offer to lend you six to seven times your income, but unless you're expecting big pay rises, or a partner returning to work, you'll be very stretched.'
'At Golden Eggs we have found that people typically spend 30 percent of their income on rent or a mortgage, and also that most people can save 20 percent of their income, if they budget properly.'
His second tip is to control your expenses - and with many people working remotely and curbing their social outings at the moment this is an excellent way to find more cash to put towards repayments.
He also advised when applying for a loan to not go too out of your depth as paying off your mortgage quicker was the better option (stock image)
Money saved on public transport, nights out at the pub, petrol, and work lunches can add up really quickly - cutting down on alcohol can save you thousands a year.
His last tip is to try and find extra income and with crowd-sharing apps this can also be done quite easily.
Renting out a room, doing jobs for people on apps such as Airtasker, or even casual work can provide some extra revenue to be mortgage free.
'I receive a lot of questions from people asking what to do if interest rates go up. Interest rates are really low right now and five year fixed rates of three percent give us the indication that they are not likely to rise any time soon,' Mr Phelps said.
'The key to success is always to borrow within safe limits, maximise income, control expenses and put around half your income towards paying off your loan.'
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