Buying your first home? Here's how to save for the deposit
Having your own home is the great Australian dream, but with house prices skyrocketing and a global pandemic delivering significant household budget implications, for many of us buying our first home is an elusive dream. But the good news is - there are actions you can take to turn that dream into reality sooner than you may think.
If you’re a first home buyer, buying a new house can be terrifying and exciting at the same time. There are many steps you’ll need to go through before you can make your purchase, but your very first step is to save enough money for the deposit. Here’s how you can do just that.
Understand the numbers
If you’re planning to buy a house for the first time, having the right strategy in place and understanding the numbers means you’re not tucking away those hard earned dollars just for the house deposit. A property's price tag is not the only consideration. You also need to consider upfront costs such as stamp duty, loan establishment fees and insurance. And you'll need to factor legal/conveyancer costs as well as building and pest inspections into the equation. Plus, you may be eligible for a First Home Owners' Grant in your state or territory, so make sure you do your research. Once you fully understand all the numbers, you’ll be able to set a specific goal for how much you need to save and for how long.
Sort your budget
The first step to saving for your house deposit (and those other fees we all love to hate) is to sort your finances and set your budget. A good idea is to list down how much money is coming in and out each month, so you’ll know how much you can allocate to your house saving account. This is also a good opportunity to review your current expenses and check which areas you can cut back on. Remember, that short term pain from not being able to indulge in the little pleasures you love will all be forgotten once you reach your deposit goal.
Open an online savings account with better interest rate
Don’t forget to think about where you will be keeping your savings, as a little strategic thinking can help you grow your money faster. It’s always a good idea to open an online savings account with a better interest rate and less fees. Be diligent when looking around for the best deals available and set up internet banking for your account so you can keep track of your savings easier and faster.
Set up an automated savings
Automating your savings is one of the best ways to ensure you’ll have part of your pay automatically going into your savings account every payday. Set up a recurring automatic transfer from your payroll account to your personal savings account, or ask your employer to automatically put a certain amount of your pay into your savings account each payday.
Consolidate your debts
Taking care of your debts first can be a great path forward to helping you start saving for a house deposit. On top of that, if you’re debt-free it’s more likely banks will favour you when you apply for a home loan. One way to consolidate your debts is by taking out a personal loan. The terms of the loan usually require you to pay back the money you borrowed over a fixed period, and at a fixed monthly fee or interest rate. The period you have to pay back your loan (the loan term) can vary from one lender to another and depends on the amount you borrow - but normally ranges from 2-12 months.
Find a side gig
Having more than one job seems to be part of the new norm these days, so if you’re saving for your house deposit, this is one great way to reach your goal sooner. The internet has become a hotbed for online side gigs, which offer a variety of freelance online jobs, such as blogging, graphic designing, copywriting, and more. You can also use the internet to find more traditional and creative side hustles, such as pet-sitting, renting your car, babysitting, and more.
Move back with your parents or find some flatmates
While this may not sound so appealing to some people, moving back to your family home or finding some flatmates to share your rental accommodation can cut down your rent and utility bills tremendously. If you prefer the latter, it’s best to have a written agreement between you and your flatmates regarding how you will split up your rent and bills. Since you’re planning to buy your first home anyway, this set up can be temporary but will increase your savings for the house deposit that much quicker. And if your new flatmate becomes a firm friend, you might even want to continue the relationship once you’ve moved in to your new home - so they can help with the mortgage.
Reach out for some help
Whatever your circumstances, the best way forward is to start with a savings plan and then try your very best to stick to it. Before you know it you'll be moving in to your dream home. Then, if you need a little bit of help to tidy the place up - just take a look at our personal loans from $1,000 to find out how quick and easy it is to get your hands on some extra money. Once a loan is approved, we can usually deposit the cash into your bank account within a few hours!