Purchasing a home is one of the biggest financial decisions one has to make in life.

Purchasing a home is one of the biggest financial decisions one has to make in life. Bryce Holdaway and Ben Kingsley, authors of book entitled Make Money Simple Again, shared how first-home buyers who are saving for a deposit can penetrate the market more easily.

Holdaway and Kingsley estimated that most first-home buyers in the country are 25 to 35 years old. They may have household incomes of $85,000 to $150,000.

They said that the biggest challenge this type of buyer has to face is saving for a deposit.

"[Saving for deposit] is by far the biggest challenge, along with their number-one frustration of housing affordability," Holdaway and Kingsley said.

With that in mind, saving as early as possible to have a foundation for a deposit is essential. Working with parents to overcome the deposit challenges can also be an option.

Holdaway and Kingsley warned, though, that buying in an area or at a time when values are dropping may not be the best idea.

"If you want to buy in a market where property prices are declining, don’t buy yet, keep saving,” they said. “Why pay interest on a mortgage if the property value isn’t improving? [Watch] the market like a hawk and once it bottoms out – negotiate hard, like your life depended on every dollar. You will be amazed by the deal you might get."

The authors also discussed how buyers can effectively manage their funds.

"To work this out the best way is to look at a 10% deposit as a minimum. So if you wanted to save $50k for a $500,000 property, try to save 20% of your overall income. If that household income was a $100k a year then you could save $50k in two and a half years," Holdaway and Kingsley said. "If you are serious about saving for a deposit and you don’t have any other important expenses such as education or schooling costs, then 20% is a good starting target. But 30% is better and will get you there quick, but would require some real sacrifices when it comes to general living."

Collections: