Buying a first home has never been more challenging, with high property prices and the rising cost of living making it difficult to save for a deposit.
However, Cube Home Loans mortgage broker Curtis Low says there are strategies available to help prospective buyers enter the market sooner.
Mr Low said one of the biggest hurdles for first-home buyers is balancing rent and savings.
“Trying to save a deposit while also paying rent is one of the biggest challenges,” he said.
“For example, saving 5% for a $700,000 property means coming up with $35,000, which is not an easy amount to put aside.”
One way to get around this, he said, is through rental ledgers – records that demonstrate a consistent rental payment history.
“If a buyer has been paying rent on time for 12 months, some banks will use that to show they are financially capable of meeting home loan repayments,” he said.
“This means a buyer who has saved a partial deposit and also receives financial help from family may still be eligible for a home loan if they can prove they have been responsible with rental payments.”
While this is an option for some, Mr Low advises that rental ledgers are not accepted by all banks, making it beneficial to work with a mortgage broker.
“We work with around 60 different lenders and can help people find the best option to suit their circumstances,” he said.
Another challenge for first-home buyers is maintaining a budget.
Mr Low said small, everyday expenses can slow savings without buyers realising.
“The biggest one I see is tradespeople buying lunch every day on the job,” he said.
“If you’re spending $15 a day on lunch, that’s $75 a week or $3,900 a year that could go towards a deposit.”
He said other habits such as dining out, buying coffee, and entertainment spending add up over time.
“The key to saving is controlling what you can by either earning more or spending less,” he said.
“A high-interest savings account can also help, with some offering around 5% interest.”
Despite disciplined saving, Mr Low said many buyers can still struggle to meet deposit requirements due to rising property prices.
“Housing affordability has changed,” he said.“There are no longer $500,000 homes for first-home buyers to snap up, so people need to consider options like units or townhouses to enter the market.”
He also advised buyers to plan for potential interest rate increases.
“The way banks assess loans isn’t just about what you pay now, it’s about ensuring you can afford repayments even if rates rise,” he said.
He recommends buyers test their affordability by calculating their repayments at higher interest rates to ensure they can sustain homeownership long term.
For those struggling to save, Mr Low said cutting unnecessary expenses is a great place to start.
“Gambling, excessive eating out, and unnecessary subscriptions are all areas where people can make small changes,” he said.
“It’s not about eliminating enjoyment but rather making adjustments that help achieve a long-term goal.”
He also acknowledged that many buyers rely on financial assistance from family.
“The ‘Bank of Mum and Dad’ is still the only way for many young people to buy a home,” he said.
“But with good budgeting and smart financial decisions, homeownership is still possible.”
