5 Tips to Save for your next Property Purchase

For most, people obtaining and saving the money to purchase property can be tricky and may take some time and careful planning. It is important to start with the basics and as your knowledge increases you can use more advanced saving and equity strategies. But to kick your investment journey off here are 5 fantastic tips that can help you to save money on your next property purchase:

Can you Afford it?

1. Make sure you can afford it. This may seem obvious but you need to be certain that you can afford the property, with the prices of property increasing daily. The amount you can afford is determined by various factors, including a down payment, taking into account your earnings versus your expenses, and the current interest rates for property.

Large Deposit2. Try to put down a large down payment. If you are able to do this, your monthly property rates will be lower, and your property will be paid off faster.

Budget Carefully

3. Budget carefully. If you are trying to save up money to pay for a property, keep in mind that it may take a while to do so. So start saving now. Make sure you track all of your expenses impeccably, keep receipts, and create a monthly budget so you know exactly what you need as opposed to what you want. You need to be prepared to make sacrifices in order to purchase property.

Bond Funds

4. Consider Investing in bonds via managed funds and use a high interest savings account.  Be careful that you match your investment timeframe with your property purchase and that your money is not exposed to high volatility.

LVR

5. Investigate your loan to value ratio. This entails dividing the loan you will have on your property (after your deposit) by the value of the property. Smart Tip - Purchase your property below market value to have an increased LVR.  Banks use your loan to value ratio to decide whether or not they will lend you the necessary funds for a property purchase. The lower your loan to value ratio is, the better your chances are of getting a loan.

Careful planning is extremely important when taking on such a large financial commitment, always have a back-up plan and be prepared to have 6 months loan repayments sitting in your offset account to allow for unexpected events in your life.


 

Jason PennaAbout Author

Jason Penna

Jason is director at Australia's leading property investment book website Propertybooks.com.au. He has worked as a financial adviser for over 10 years in institutions such as Suncorp Metway, Medfin and National Australia Bank. Jason has a passion for property and online investment and has a number of real estate property investments and online investments. He holds a Diploma of Financial Advising from the Securities Institute of Australia.

Google+ | Website | Twitter | LinkedIn | Products