How Long Does it Take to Save for a Home Loan

Buying a home is the Aussie dream. Everyone used to think they could get a home settle down, raise kids and live a happy life. Essentially it was the way things were done. Increasing population and increased immigration number on the east coast of Australia have really put the squeeze on some young couple looking to enter the property market. Basically it’s made it extremely unaffordable and out of reach in some cases for many Australians. A lot of them feel as though they have missed the boast so to speak. It is a sad sate of affairs.

Having said that you can still afford to get in the property market if you are prepared to save and work really hard. This leads to the question of how long does it take to save for a home loan in Sydney, Melbourne and Brisbane?

If we look at the current housing prices and average incomes we can tell how long it would take for a young couple to save 20% which is a decent amount for a deposit for a home loan. We can assume they are professionals and we will also assume that housing prices stay static during this period that they are saving. Also their income remains constant as well.

homebuildingtipsSydney

This is without doubt the jewel in the crown of the Australian property market and the average price for a home is roughly $750 000. If the staring salary for a university graduate is $55 000 and there are a couple then the combined income is $110 000. You are left with about $90 000 after tax. To save for a 20% deposit this means putting away (assuming this couple will save 20% of their earnings), $18 000 per year. Without taking any market fluctuations into account it would take this couple 8.33 years to save the 20% for a home loan. So if you are around 20 years of age you could get your home when you are 30. With these stats I would be making very good friends with the in laws.

Melbourne
The average house price in Melbourne is $550 000 and the 20% deposit will equal $110 000. Graduates in Melbourne earn slightly less than in Sydney at $50 000 per year and with 2 incomes that’s $100 000. Post tax they nett about $82 000. So putting 20% away that’s $16400 per year and to get a 20% deposit they will need 6.7 years to get the funds to get the home loan deposit which is better than in Sydney!

Brisbane
Brisbane is so much cheaper than the other capital cities. Using the above formula where the average uni graduate in Brisbane earns about $50 000 and the average house price is about $450 000, you would be looking at roughly 5.3 years to get the home loan secured.

So what does this really mean

It is really all based on where you are trying to buy the home. The bigger and more popular the city the longer it will take to get the 20% for the home loan. Plus you need to take into account all future payments. This decision to enter the Australian property market is not to be taken lightly and you should seriously shop around for the best deal once you do have that hard earned 20%. So save hard and be carful who you decide to use for your home loan.

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