How to save for a home deposit
May 15, 2017
Budget

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Buying or building house is an exciting and life time experience and a big deal for first time home owners as one mistake may leave you in debt for years. Due to the high costs of building and land most people in Australia rely on financing from banks and they repay the money through mortgage spread over years. These banks require one to pay a deposit and your deposit has a great influence on interest rates and time you must pay the money in. Saving up is never easy and requires self-discipline and other life alterations to be a success.

The first thing to do is to prepare a budget and stick to it. One mistake home buyers make is to underestimate the cost of purchase. They seldom consider other costs involved such as council fees and duty stamps. When budgeting you need to also include that. In setting up the budget you need to use the SMART goals. S being specific and this case is specifying the amount you need, M for measurable, A for achievable, R being realistic of course you can’t be planning to save what you do not even earn and last and most importantly T for timely and this implies specifying that time that you need to have saved the deposit in.

One should also consider paying off any existing debts and credit cards before starting to save so they can solely focus on that. SA good idea is to also include your partner in saving up and this will be achieved in a short time. Put money towards home deposit and open separate savings account for it. Here’s the government’s guide to budgeting.

Use your pay to save up, do not first spend then save the remainder but one can for example save about 10 percent of their pay cheque and use the 90 percent for other things. If it’s a strain getting a second a job and direct that pay towards saving up for the house. Some people even go to the extent of selling their unwanted things on forums such as EBay and this helps a lot as it also can allow you to rent a smaller house after clearing your things. Consider also renting out a room to someone that small amount that they pay bank it towards the home loan deposit.

Be smart with your money, appropriately use your funds. Eliminate luxuries and use the costs to fund your savings. Luxuries include holidays every now then and other things like alcohol. A friend of mine managed to save about 2000 in a year by cutting off alcohol. Consider cutting down on buy food at work and carry food from home and this can save you about 50 dollars a week. Also consider buying cheaper products wherever possible as long it does not compromise the quality of your life. Lastly and most importantly take advantage of first home owner concession from the Government that assist people in buying their first home in Australia.

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