If you’ve long dreamed of owning your own home but feel overwhelmed by the first hurdle – saving for a deposit – you’re not alone. The good news is that some savvy tips and tricks can help you pull together a deposit in less time than you think. Read on to discover the eight best ways to save for a house deposit.
Let’s be frank: for budgeting to be effective, you need to know exactly how much you need to save, and why. If you only have vague plans of wanting to buy a house ‘some day’, your goal won’t feel real or tangible and you probably won’t do much to make it happen. On the other hand, if you know what you’re working towards and how to get there, you’re more likely to make regular lifestyle concessions – like forgoing a coffee, a movie, or a dinner out.
Do your sums and identify how much you can realistically afford to spend on loan repayments. Make sure you set an achievable goal, finding a balance between what you want and what you can afford.
If you’ve calculated that you can afford repayments on a $500,000 house, how much deposit will you need?
So, how do you get from your current position to save $100,000?
First, track your expenditure for a month or two, making note of every dollar you spend. At the end of this period, work out how much you’re spending on rent, groceries, electricity, water, and so on. This might seem like a lot of effort but stick with it, as it can be hugely effective to understand where your money is going:
Research different banks and building societies, as some savings accounts are more generous than others. Check the fine print so you have a clear idea of any fees the bank will charge. Once you’ve chosen the best deal, open a separate, high-interest account. And here’s the key: automatically transfer your savings the day after payday. This way, you’re compelled to live off your salary after making your monthly savings.
Once you know where your salary is going, set a budget for each and every expense. Make sure you include incidentals like gifts, taxis, and meals out. The Australian Securities and Investments Commission (ASIC) offers both a budget planner and an app for tracking expenditure, which can help you stick to your budget.
If you have any debts, like car loans or credit cards, try to pay these off as a priority once you start your savings plan. Not only will you save on interest, but it will help with your credit rating and ability to borrow when you’re ready.
Check to see if you’re eligible for a First Home Owners Grant. This can count towards your deposit, but it’s generally geared towards those buying or building a new home. You might also be eligible for concessions on stamp duty if you’re a first home buyer, a pensioner, or buying a property of lower value (generally less than $500,000 in most states).
If you have any questions about budgeting or how to secure financing, contact your local G.J. Gardner Homes office.