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Saving for a house deposit is the first step toward securing your dream home and building a solid foundation for your future. While the amount required for a deposit might seem daunting, with the right strategies and determination, you can turn your dream into a reality.
First things first — how much do you need to save? The amount needed for a house deposit can vary depending on your property’s price and your lender’s requirements. Typically, most lenders ask for a deposit of 20% of the property’s value.
However, it’s essential to remember that some lenders may offer loans with lower deposit requirements. Keep in mind that a greater deposit often translates into more favourable loan terms, including lower interest rates and reduced monthly repayments. Read more about this over in our first home buyers blog.
Once you’ve determined how much you will need to save to buy your home, you can use these tips to get the journey under way.
1. Create a budget
Now is the time to establish a realistic budget. Your budget should factor in your household income and expenses, along with your savings goal.
Look for areas where you can cut back on non-essential spending, such as dining out, subscriptions or entertainment expenses and redirect these funds toward your house deposit savings.
2. Reduce debts and expenses
To save for a house deposit, prioritise reducing high-interest debts such as credit card balances or personal loans. This will not only free up more funds for your savings but also improve your ability to take out a home loan.
While you’re looking closely at expenses, go through your bank transactions and highlight things you’re not sure about. Is there a streaming platform you’re not using? Are you making more online purchases than necessary? You could also speak with your phone, internet, insurance and utility providers to negotiate rates.
3. Automate your savings
Rather than rely on yourself manually transferring savings, set up automatic transfers. This allows for a set amount of money to go directly into separate savings accounts when you are paid. Ideally you will have a separate account dedicated to your house deposit.
Automating your savings ensures that a portion of your income goes directly towards your goal before you have a chance to spend it elsewhere. A dedicated savings account can be a smart way of separating your savings from everyday money, reducing the likeliness to splurge on items you may want but not necessarily need.
4. Explore government grants and schemes
Check if you are eligible for any government grants or schemes that assist homebuyers in saving for a deposit, such as the First Home Owner Grant or similar.
These incentives can provide a significant boost to your savings efforts. The availability of government grants and schemes can change, so it’s always important to check with reputable financial advisors for the latest updates and requirements when planning to buy a home.
5. Increase your income
While it’s easier said than done, earning more money is a way to boost your savings. This could involve negotiating a raise or promotion at your current job, taking on a part-time or freelance gig, or selling items you no longer need.
6. Stay disciplined and patient
Saving for a house deposit won’t happen overnight and requires you to stay focused on your goal. Remind yourself of the rewarding outcome—owning your dream home.
Consider creating a vision board or sticking photos of homes you love on the fridge to keep your eye on the prize. Remember, every little bit counts, and discipline is the key to successful savings.
The journey to homeownership may require patience, but the end result—owning your own home—makes it all worthwhile. Fairhaven is here to support you throughout the process, helping you turn your dream of homeownership into a reality.
Remember, specific financial advice should be obtained from a registered financial advisor and be tailored to each individual’s circumstances. However, these top tips can make a big difference for your savings efforts and help you on your way to building the future you’ve envisioned.
Our partners at RateOne take the time to understand your financial goals and desires. Their team will tailor a solution to meet your individual needs, to ensure that your finance journey is not only in order, but also an exciting one.