SAVING INITIATIVES FOR FIRST HOME BUYERS
- Written by Melanie Toye, February 28, 2014
Take a look out one way to focus on building your savings for your first home:
The Government has introduced a first home saver account to help you reach your goal in buying your first home. When you add funds to this saver account, the government contributes a percentage of your savings annually.
There are some rules in place to help the first home buyer stay focussed in their savings when using this account:
- The first home saver account can only be used for funds to grow to be able to purchase or build your first home. If it is not used for a property, it will be moved to your super.
- Before you can withdraw any funds, you must have saved a minimum of $1,000 annually, over four years.
- The maximum amount of savings allowed in this account is $90,000.
- Once you buy or build your first property, you will not be able to make any more deposits into the account.
The first home saver account is great for those who want to see their goal getting closer and closer to achievement. It is also a wonderful way to build your savings for a home, by having the Government contribute to your savings account on an annual basis. The other benefit is the first home saver account should have low or zero fees, with a good interest rate.Be sure to shop around for a competitive rate.
Also make sure to do your research into other savings accounts available. If you do decide after two years that you do not want to buy a property but rather travel or use the savings to start a business, then you can freely do so from a normal savings account. Rather than having it locked away in a home saver account.
The additional government contribution could score you a couple of thousand dollars (pending on how much you add to the account annually). This additional contribution is invaluable to a first home buyer.
Another great decision by the Reserve Bank of Australia Board that all Australian home owners will be cheering about. On 2 September, the Board decided to leave the cash rate unchanged at 2.5 per cent.
This gives mortgage owners a chance to continue to add additional money into their mortgage without the funds being chewed up by high interest charges.
And because of this, mortgages will be paid out much quicker. In some cases, if a mortgage owner adds an additional $200 a week into their mortgage. They might be able to chop five years, off their total loan amount. Can you imagine not paying a mortgage repayment anymore? Well, if you pay extra in your mortgage while taking advantage of the low interest rates, you could be living without a mortgage much sooner than you except.
The things you could do with that extra money. Maybe even put it towards a holiday home, or investment property, or building your super, or just taking a wonderful holiday somewhere.
Sooner or later, interest rates will climb again. There is no doubt about that. So taking full advantage of the low interest rates now, is in your favour.
Pending on who your mortgage is with, you might be able to put the additional payments into a redraw facility, in case down the track you need to use it for an emergency.
Some mortgage owners put their additional funds into a savings account to earn interest. But say $5,000 in savings a year, you earn $100 in interest and then taxed from the interest you earned. Would it be more for your end pocket if your savings were put against your mortgage?
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- Saving initiatives for first home buyers - February 28, 2014
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- Lowest interest rates ever yet mortgage stres.. - October 26, 2013
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- Selling and your mortgage - October 11, 2013
- September records show a rise - October 4, 2013
- Reserve rates hit record low - August 11, 2013