Yahoo Finance ‘Save hard’: How to buy a house without a partner
When Natalie Vieux got back from living in London after two-and-a-half years, she had a plan.
Save, and save, and save, and buy property.
Drummed into her head since when she was little, she knew that she would rather own a home than spend her money on "paying off someone else's mortgage".
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Two years later she did it, purchasing a $535,500 home in Dee Why in northern Sydney.
“I definitely knew it would take longer than if I did have a partner,” she told Yahoo Finance.
“Looking at apartments, I can see that I could afford something so much better if I had a second wage.
“But at the same time I'm really happy that I'm even able to do it on my own, because I think there's probably a lot of people that would think that they wouldn't be able to. It is something that you have to work towards for a while, and just stay on track.”
How did she do it?
It came down to saving money, and making sure she didn’t touch those savings. A $10,000 nudge from her parents also helped.
“I fast tracked it, and I think it also helped that I was on pretty good wage,” she said.
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“I had a good base wage and then I also get commission… I made a yearly goal that I wanted to try and hit, or how much savings I wanted by the end of the year, and I worked back on how much I would need to save each week, and then every commission payment went into that account. So I did it within two years.”
She saved around 34 per cent of her income over that time for a 14 per cent deposit of $78,500.
Cutting back
A solid salary is a good start, but it also takes a dedicated approach to saving. Vieux said she read The Barefoot Investor, which taught her that nothing would change unless she did something about it.
“Taking that into consideration, I stopped buying coffee during the week because that is just lost money when you can have it for free at work. I've always been massively into my exercise – so instead of catching transport, I cycle to and from work. So I can tick the box of having some exercise and I can also get to work for free, after the initial cost of buying a bike.
“I always meal-prepped and took my lunch in at least four days a week.”
At first, she struggled with The Barefoot Investor’s rule that entertainment should only be 10 per cent of your wage.
But over time she got used to it – catching up with friends for a walk or a coffee, rather than an expensive dinner or ritzy brunch.
“Something that didn't cost much, but I could still have that social interaction and catch up with people. Because that's really what you're trying to do.”
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She also cut back on alcohol, framing $12 glasses of wine while out as $12 that could instead be spent on a cheap lunch with a friend the next day.
‘People thought I was being a bit stingy’
Vieux’s firm rules meant she felt like some people thought she was a “bit of a tight-arse over the last couple of years”.
Group dinners out where meals were split evenly, even where Vieux chose the cheaper option, didn’t have an entree and didn’t drink could be awkward.
“I don't know if I was just being insecure about it all, but I definitely wondered whether people thought that I was being a bit stingy at times.”
But it was worth it
When she did nab the Dee Why home, she felt a “huge amount of gratitude”.
“I'm just really happy for myself and that this really finally paid off. And I think it really just happened to be a lot of hard work.”
Can I buy a house without a partner?
Yes, says personal finance expert and founder of consultancy On Your Own Two Feet, Helen Baker.
“If you're aiming for something, one of the best ways to do it actually have money come out of your salary to a separate bank account so you don't mix it up with what you've already got,” she said.
The next step is to do what Vieux did - set the goal and work backwards from there, dividing up the amount of money you need to save by how long you have to save it.
Putting your savings into a high-interest saving account is also a good idea.
Baker said you should also set aside two-five years to achieve the goal.
“But again, it's about making the sacrifices. If it's really important to you that you want to get there within a short period of time, then you make those sacrifices to get there.
“For other people, it's like, ‘Well, I still want to keep most of my lifestyle. I still want to do want to do my overseas holiday once a year, but I'm happy to sacrifice some more time before I want to enter the market in order to do that.’"
As with any person moving into the property market, it’s critical that single homeowners have income protection insurance to ensure they’re not stuck if they’re out of work for a while.
And with the spate of apartment flaws coming to light, homeowners also need to make sure that they’re not purchasing a lemon.
Realistic expectations will also help you save money over the long term. That is, maybe you can’t afford to revamp the kitchen and the bathroom within the first year, so you’ll have to be content with stretching those renovations out.
Is it as hard as it seems?
“It's about choices,” Baker said.
“Like anything that you want to do, it's about making those decisions around, ‘Is this really important to me? And to make the numbers back up, am I willing to make a sacrifice in some other area to make this work?’”
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