Your journey to homeownership: Step-by-step towards the property ladder
Owning a home is a major life goal for many Australians (and particularly Raiz users), but the road to the property ladder can feel confusing and overwhelming. With careful planning and a clear understanding of each step—from saving a deposit to managing your mortgage—you can approach the process with confidence. Not everyone will need professional services like brokers or buyer’s agents, but understanding their roles can help you decide if they’re right for you. Additionally, the Raiz Property Fund and tools like in-app savings goals with recurring investments provide smart ways to stay connected to the property market while you build toward your dream home.
Building your deposit: Where to begin?
The first step in buying a home is saving for a deposit. While a 20% deposit is recommended to avoid Lenders Mortgage Insurance (LMI), some lenders accept smaller deposits of 5-10%, though this adds extra costs. For example, if you’re eyeing a $600,000 property, a 20% deposit would require $120,000, while a 10% deposit would only need $60,000 but come with additional LMI fees.
Raiz makes it easier to save toward big goals like a house deposit. With Raiz’s savings goal feature, you can set a target (like “First Home”) and automate your progress with recurring investments—helping you stay on track without having to think about it every day.
The hidden costs you need to know
Beyond your deposit, you’ll need to budget for additional expenses. Here’s a breakdown of common hidden costs:
- Stamp duty, which varies by state and property value.
- Conveyancing fees of $1,000 to $2,000 to handle the legal paperwork.
- Building and pest inspections, typically costing $500 to $700.
- LMI if your deposit is under 20%, potentially adding thousands to the total cost.
- Moving costs and utility setup fees, which can add up to over $2,000.
Planning for these expenses in advance ensures fewer surprises when it’s time to settle.
Do you need a mortgage broker or buyer’s agent?
While optional, mortgage brokers can simplify the loan process by comparing different lenders and products on your behalf. They often find better rates than what you might be able to get on your own and assist with the paperwork, but their services aren’t essential for everyone. Some buyers prefer going directly to their bank or lender.
Similarly, buyer’s agents are another optional service. These professionals help you find the right property, negotiate prices, and handle time-consuming tasks. While helpful for those navigating a competitive market or short on time, a buyer’s agent may not be necessary if you’re comfortable with the process or already know what you want.
When using a mortgage broker, they are paid by the bank that processes your loan, with no out pocket costs incurred to you. Buyers agents on the other hand are paid directly by you (the buyer), and can a costly additional expense to consider.
Managing your mortgage wisely
Once you’ve purchased a home, smart mortgage management can save you money in the long run. Switching from monthly to fortnightly repayments is one effective strategy—since there are 26 fortnights in a year, this adds one extra repayment annually, shortening your loan term.
Using an offset account is another great way to reduce interest. By linking your savings to your home loan, the balance reduces the loan amount on which interest is calculated, helping you save on interest charges over time. Additionally, making extra repayments—even small ones—can significantly reduce the overall length of your loan.
Investing in property with the Raiz Property Fund
While you’re saving for a deposit, the Raiz Property Fund offers a potential way to grow your wealth through property-focused investments. The property fund is made up of a diverse portfolio of residential homes all over Australia, bought outright by Raiz with no debt. This Investing in the Raiz Property Fund can be done by choosing the “Property” portfolio from Raiz’s prebuilt portfolio selection, or by adding a custom weighting up to 30% in Plus portfolios. There are also options to add property to Raiz Invest Super accounts. It’s a simple way to stay connected to the property market, even if you’re not ready to buy your own home yet.
Because the Raiz Property Fund is integrated into the app, you can easily invest at your own pace alongside other savings goals—giving you a head start on your journey toward property ownership.
The journey to owning a home can seem long, but breaking it into smaller, manageable steps makes the process easier. By understanding the key stages—saving for a deposit, budgeting for hidden costs, deciding on professional help, and managing your mortgage wisely—you can approach the property market with confidence. And with tools like Raiz’s savings goals and the Raiz Property Fund, you can make steady progress toward homeownership while potentially growing your wealth along the way.
Owning a home may take time, but with the right plan and mindset, the property ladder is within reach—one step at a time.
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Important Information
Raiz Invest Australia Limited – Authorised Representative of AFSL 434776. The Raiz Invest Australia Fund and Raiz Property Fund are issued in Australia by Instreet Investment Limited (ACN 128 813 016 AFSL 434776) a subsidiary of Raiz Invest Limited and promoted by Raiz Invest Australia Limited (ACN 604 402 815).
Raiz Invest Super is a Division of AMG Super and is issued by Equity Trustees Superannuation Limited (AFSL 229757, RSE Licence No L0001458) as Trustee of AMG Super.
The information is general information only and does not take into account of your personal financial situation, goals or needs. You should obtain financial advice tailored to your circumstances by a licensed financial adviser.
A Product Disclosure Statement (PDS) and Target Market Determination (TMD) for Raiz Invest Australia Fund, Raiz Invest Super and Raiz Property Fund (together, the Products) are available on the Raiz Invest website and App. Please read and consider the PDS and TMD to understand the risks and determine if the Products are suitable for you. The risks and fees are fully set out in the PDS and include the risks that would ordinarily apply to investing.
Any returns shown or implied are not forecasts and are not reliable guides or predictors of future performance.
Under no circumstance is the information to be used by, or presented to, a person for the purposes of deciding about investing in the Products.
This information may be based on assumptions or market conditions which change without notice and have not been independently verified.
Any opinions or information expressed are subject to change without notice.
Home loans are subject to approval from the lending institution and Raiz Home Ownership makes no warranties as to the success of an application until all relevant information has been provided.
Raiz Home Ownership Pty Ltd (ABN 14 645 876 937), an Australian Credit Representative number 528594 under Australian Credit Licence number 387025. Raiz Home Ownership Pty Ltd is 100% owned by Raiz Invest Australia Limited (ABN 26 604 402 815).
