Saving for a deposit is understandably often the biggest hurdle for first home buyers. According to a recent ANZ CoreLogic report, it takes around 11.4 years to save a 20% deposit in Australia. While the outlook may appear grim, buying your first home or investment property isn’t out of reach. Here are our tips for reaching your home deposit goals sooner.
Tips for saving for a home deposit
1. Set a savings goal
Having a savings goal will give you a target to work towards. A common goal for a home deposit is 20% of the purchase price, which avoids Lender’s Mortgage Insurance. To work out your ideal target amount, you’ll need to know how much you can borrow.
2. Work out how much you can save each month
You’ll need to work out how much you can afford to save each month to reach your home deposit goal. Remember to be realistic with your budget and timeframes to avoid stretching yourself. If you need financial advice, you might like to consider contacting a financial planner. If you would like to be put in touch with a financial planner, we can help you. Request a call back today.
3. Manage your debt
If you have ongoing debts, such as personal loans, car loans or credit cards, focus on paying these off as soon as possible. Consider consolidating your loans into one to make them more manageable. Avoid increasing debt further by removing credit cards if possible.
4. Look for ways to cut back on spending
Have a look at your bank transactions from the last three months and see which expenses you may be able to cut or reduce. These might include memberships or services that you no longer use or need. Consider changing your spending habits where possible, such as eating out less or reducing the number of streaming service subscriptions.
5. Open a high interest savings account
Set up a separate bank account for your savings and choose one with a high interest rate and no monthly fees. Get into the habit of transferring money into your savings account as soon as you get paid, or set up automatic transfers.
6. Reduce your accommodation expenses
Saving for a home deposit while renting can make it challenging to achieve your goals. If it’s possible, think about temporarily moving back home with your parents, or moving into a share house.
The process of saving for a first home can seem overwhelming. We can help you by looking at your situation and goals to create a savings plan to get you into the property market. Book an appointment with one of our Borro brokers today or call the team on 1300 1BORRO.