Wollongong teacher buys home with $50,000 deposit

A savvy NSW teacher has bucked the current trend, managing to buy her first property by uncovering ways to make her money stretch further.

As property prices started to skyrocket, longtime renter Kate Walker was “freaked out” as she wondered if the deposit she had been saving for years was ever going to give her the dream of home ownership.

The Wollongong resident had been putting every spare dollar towards her goal of buying a home. Always a bit of a saver, she had been living a frugal life compared to her 27-year-old peers.

“I don’t have any subscriptions like Netflix all those sorts of things, I don’t have UberEats on my phone, I make spending a bit harder so I can get takeaway if I want but if it’s on my phone on Deliveroo it’s too easy. I’ve never had a credit card and I’ve never used Afterpay,” she told news.com.au.

“A lot of my clothes are second-hand but I’ve always been that way. I don’t buy a lot of commercial stuff – I naturally like to reuse things.”

But with stories of families having savings over $100,000 but still unable to snap up a property, Ms Walker has managed to buck the trend.

Armed with a deposit of $50,000, which included $10,000 from a family inheritance, the teacher recently purchased an apartment in Wollongong.

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She doesn’t have subscriptions to services like Netflix and refuses to download UberEats or Deliveroo to stop her spending money. Picture: Supplied

She managed to do it by making use of government schemes including the First Home Loan Deposit Scheme, First Home Super Scheme, First homebuyer stamp duty waiver and First Home Owner Grant.

Ms Walker said she didn’t think it was realistic to buy until she uncovered the schemes.

“I’ve used that First Home Super Scheme and in doing that I actually saved about $2500. Instead of paying 33 per cent tax on income, the money you put in the scheme works out to be only taxed at 15 per cent,” she said.

“I actually have multiple bank accounts too and my pay goes into one account and then one account is my bills account. The other account is my savings account, and that one I calculated how much per fortnight I could easily save, and automatically put it in there so I don’t think about it. The cool thing is with Westpac they have a 3 per cent interest rate for people up to the age of 29 so I have capitalised on that.”

She purchased her off-the-plan apartment for $594,000, which includes two bedrooms, two bathrooms and a car spot.

“I’m really grateful as I don’t think it would have happened without the schemes. The goalposts on how much money you need kept moving for me and without the schemes it would be a place in a location I don’t want to live and it would be old and require maintenance which then is a catch-22. If I can only just afford that then I can’t afford the renovations, so basically it wouldn’t be possible without the schemes,” she said.

Having rented since she was 19, she’s excited for the security of home ownership, being able to put roots down and to even get a pet.

“When you are in rental there is always a fear they might not renew the lease or might sell the property,” she said. “Financially, I’m also not paying someone else’s mortgage.”

Her biggest recommendation is for people to become financially literate, rather than putting their “heads in the sand” when it comes to money, with Ms Walker undertaking a project to educate herself in the last NSW lockdown through podcasts on saving and investing.

RELATED: Woman’s epic 10-year ‘slog’ to buy home

Having rented since she was 19, she said she is looking forward to the security that her own home will bring. Picture: Supplied

Pandemic affects people’s savings power

But since Covid-19 hit, people are saving more with most buyers managing an extra $40,000 to $50,000 that they usually would have spent on travelling or going out, according to Elending senior finance broker Marina Michael.

She recommends first homebuyers spend the time to research their finance options, including borrowing capacity and deposit options.

“Each bank will lend a different amount, with the biggest variance up to $220,000,” she said. “One client thought they were locked out of the market initially as he approached his bank directly. We found a bank which would lend him an extra $220,000 and has already settled into his new home.”

Ms Michael also advised people to understand what government incentives are out there to help, like Kate did.

The First Home Loan Deposit Scheme has now split into three types of schemes – where you can buy a home with a deposit as little as 5 per cent, while the new home guarantee supports you to build or buy a new home, with higher property price caps available in selected areas, she said.

There’s also the Family Home Guarantee which aims to support eligible single parents with at least one dependent child in purchasing a family home, with a deposit of as little as 2 per cent.

Depending on which state you are in, you may be eligible for a First Home Buyer Grant to give a boost to your deposit, she said, and people could also look at a family guarantor loan which allows you to borrow the full purchase price and costs, including stamp duty.

A view of how Wollongong could look in 2040. Picture: 3D render created by Arterra Interactive

She added people should crunch their costs and spread their property search.

“It is important to be realistic about what you can afford including the deposit, inspections, legal costs, stamp duty, fees and home loan repayments,” she said.

“Target homes and locations in your budget so not to get disappointed. If you are outbid you may be looking at homes which were out of your budget to start with and research recently sold homes to get a better price guide.

“We are seeing more clients use buyers’ agents as they advise the client on what property to expect with their budget, organise due diligence and help them negotiate quickly – which results in them buying at the right price quickly.”