Savings Management - Home Stretch

I have mentioned several times that our savings for the deposit was relatively fluid in the lead up to our application.

This situation changed in the home stretch.  When you are not touching your credit card and making sure you have a good repayment history, you also have to leave your savings account untouched, except for deposits.

This tells the bank that you are able to make all your repayments, pay all your living expenses and save without touching the money.

You are therefore paying rent and then trying to boost your savings as much as possible at the same time.  When you own your own home, you don't have to pay rent, you pay a mortgage instead.

This is probably the hardest period in the lead up to getting a home loan, it will likely be one of the hardest times in the whole journey of owning your own home....  This is why people find it hard to get a home loan.

I had gotten a job and organised all my direct debits for required repayments, now was the time for me to sell my shares.  This is because the bank likes to see that you have had the deposit saved and untouched for several months before you even apply for the home loan.  It makes you look like a better option, less of a risk for them to invest in because you will likely make sure you re-pay your mortgage.

My shares were finally starting to recover but slowly and not by much and I put them on the market for several weeks until they reached the $8 each that I wanted to sell them for as a minimum in November 2012.  We had also used a chunk of our savings to help pay for the new car and just come through Christmas.  I could have waited until I was able to slowly replenish my savings account but I figured this would take several months and we wanted to take advantage of the current housing market.

In Australia house prices were still high but in December 2012 they were the lowest they had been in 5 years or so and in January 2013 interest rates for home loans were the lowest they had been in 50 years.  I had been watching the market and figured I could possibly get a first home for less than $200K.  It was the best time for us.

We made the decision to ask family members for a small loan purely to boost our savings deposit.  This was a personal loan, not a gift.  We agreed on repayment rates and the money was deposited and left in our savings account.

It was important to make these large deposits from our shares sale and the personal loan into the savings account early, so it could be left for several months to create a favourable financial history for us.

Everything was set, all our financial affairs and preparations were in order, we just had to keep on working and following the plan for 3 - 6 months until I had cleared the minimum employment period as a casual worker to qualify for a joint home loan.