Being a first-time home buyer can both be exciting and make you a nervous wreck not because it will entail a lot of money, but it can also be a stomach-churning thought especially if you do not want to make any mistake on your initial purchase.

If there’s any consolation, though, your first time will always be an exciting experience to find satisfaction when you are finally moving into your new home.

But there’s more than just the cost of the property and these could depend on the value of your property. Also, it is important to be aware of the vital details and requirements to owning property that first-time buyers need to be seriously aware of.

For one, coming up with 20% of the property value as an initial deposit to move to your new home is just one of several other costs that you must consider. Here’s what a first-time homeowner should also take into account.

Income and capacity to pay

This is a fact- that people work hard to earn money.

But have they ever considered how and where they should spend their earnings? Being able to track one’s spending is the first step to jumpstart in planning to set aside money as mortgage deposit savings.

Determining your income and comparing it with your basic expenses, credit card payments, recreational activities, and lifestyle will allow you to get a good picture of how and where your money is being spent.

If you plan to pursue your desire to save up for a house deposit a good practice to set aside a minimum of 20% from your income for savings. This will give you a grasp of how your money comes and goes.

Making some lifestyle sacrifices to save money for debt servicing can give you long-term gains and more financial freedom.

Doubling the amount for your loan repayments can shorten the term, at the same time give you more opportunities to service your debts as interest rates can be adjusted lower for advanced payments or rebates for higher debt repayment amounts.

Do take note that a longer payment term means that interest rates are likely to be compounded over time, so start saving a lot by getting your loans and obligations settled as soon as possible.

Make a budget

Many people find it difficult to make a budget and adhering to it. Admittedly, it is still one of the best ways to keep track and manage your income, spending, and how you can devise ways to cut back on spending and set aside money for more pressing and important needs and responsibilities.

For some, the 20/30/50 budget rule is useful and practical, which means that they set aside 50% of their income for necessities, 30% to material or lifestyle spending, and 20% for savings.

Making lifestyle or material spending changes may involve cutting down on your grocery spending, dining out, or the unnecessary purchase of popular electronic devices by diverting that money to your savings.

Explore home loan options

Exploring and comparing all probable options for home loans are the practical and smart way to go. The real estate market is very competitive and has resulted in the development of different mortgage types from fixed to variable-rate loans, investment, and interest-only loans so considering one that suits you best is critical.

There’s also the First Home Owners Grant by the Australian government to help first-time homebuyers to help ease the costs associated with purchasing real estate property.

Other costs

Other than the deposit there’s land taxes, insurance, council rates, contingencies, maintenance, and management fees. A good way to calculate this is to let 10% of the property’s value make up these costs, while for property investments the need to keep track of spending involved in buying and operating commercial property for positive cash flow management.

Listed are the most common costs associated with property investments;

Loan fees- these are required when applying for financing, such as application or settlement fees that need to be paid upfront and rates vary among lenders.

Stamp duty- this commonly makes up at least 6% of the property value and varies between territories and states.

Lenders Mortgage Insurance- this is required if you need to borrow more than 80% of the investment property value.

Valuation fee- this includes costs for pest and building inspections or when purchasing strata property requiring a strata report.

Conveyancing costs and legal fees- these are costs associated with legal requirements when buying property.

These involve legal processes needed when purchasing property shouldered by the home buyer, engaging the services of a conveyancer or solicitor to figure out and simplify the legal processes and document preparation, which also includes legal advice regarding your property purchase.

The legal fees can cost a minimum of $1,000 but can be higher depending on the complexity of the ownership structure or property status.

Increase your savings

You can cut down on utility bills by installing smart energy conservation systems at home or take public transport going to work to save on fuel. You might be surprised that when you combine all these, you can set aside a few hundred dollars for your savings fund.

It may seem daunting and difficult to save money for these costs, but bear in mind that with a careful evaluation of your lifestyle and spending you just might be able to realise your desire to save up money for your first home or invest in real estate assets of your dreams.