Top 8 Tips For Saving Your First Home Deposit
When saving for your first home, a question often asked is how much deposit do I need?
With over 10 years’ experience working in the home loan space, we went straight to finance expert Sunny Singh. Part of Resolve Finance, our award-winning, in-house mortgage brokerage, Sunny breaks down 8 simple ways on how you can achieve this.
From understanding how to achieve your borrowing potential, how to save for your home deposit, understanding your expenses, and schemes to budgeting – all areas are covered to help you get into your new home sooner.
1. Set a savings goal and budget
First, work out exactly how much money you need to save for your home deposit. There are plenty of online calculators that can help you work out your borrowing power based on your salary and current debts. Scope out your preferred suburbs to get an idea of house and land prices, and work out exactly how much your repayments would be for a loan of that size.
First home buyers may also be eligible for government grants that can help cover a portion of those initial costs.
2. Track your spending
Once you have a clear idea of exactly how much you can afford and need to save, it’s time to perform a stocktake of your expenses. Make a list of your monthly expenses – from rent, utility bills and car insurance, to app subscriptions, groceries and takeaway coffees. Once you know what your expenses are, set a weekly or monthly limit and reduce that limit over time.
Tracking your expenses for a couple of months will give you a concrete idea of where your cash is going.
‘People often underestimate the amount of money they spend on eating out or on entertainment,’ says Sunny.
3. Find simple ways to save on everyday expenses
Once you are more aware of your spending, it’ll become easier to find ways to save.
- Write out a meal plan for the week and your grocery list – don’t select unnecessary items at the store.
- Buy in bulk – this can save you serious dollars!
- Set aside a budget for eating out, take-away or UberEats.
- Minimise the amount of daily coffees you get – you’d be surprised how much you can spend on just take-away coffees!
The average price of a takeaway flat white is about $4.10 – meaning you could be saving $28.70 per week ($1492.40 per year) by cutting this one expense.
TIME TO ACCELERATE INTO YOUR NEW HOME!
Getting into your first home can seem like you’re chasing a moving target. Just when you think you reach your goal, the goalposts have moved.
You may qualify for Home Accelerator through Resolve Finance, who offer free finance coaching, an associated app to track your expenses, and a personalised savings plan.
With Home Accelerator you can lock in your new house and land package for just $5,000*. The best part? The package price you agree on is locked in! Home Accelerator really is your unfair advantage, so let’s get started and make your first home happen sooner.
4. Renegotiate your direct debits and services
Services such as your mobile and internet plans, utilities and insurances are all part of a saturated market. Use this to your advantage by seeking out better deals or renegotiating with your current provider for an easy saving each month.
While you’re at it, do a stocktake of any subscription services that aren’t offering value for money. Do you really need Binge, Netflix and Stan, or will one entertainment platform do?
‘Remember, every saved dollar is money you could be spending on your own home,’ says Sunny.
5. Look critically at your debt management
Credit cards, in particular, can result in unnecessary and costly expenses each month.
‘Make sure you’re paying off debts or credit cards completely each month or as much as possible, to avoid paying interest,’ says Sunny.
‘If you have multiple credit cards, it may also be worth consolidating the debts via a balance transfer. Just take careful note of when the interest free period expires and reverts to a new interest rate.’
6. Move your money into a high interest savings account
It’s important to maximise the potential of the money you are working so hard to save. Do your research and find a bank with a higher interest rate and lower fees.
Setting up a direct debit from your everyday account to your savings account each month aligned with your pay day is a sustainable way to save for your deposit.
‘The true value of a savings account is in the compound interest, so try withdrawing from it only in emergencies. Set a savings goal and try it out for a couple of months before trying to increase the amount you save,’ says Sunny.
7. Create a side hustle
A side hustle may be the answer to fast tracking your savings and getting into your own new home sooner. From a weekend job to UberEats deliveries in your spare time, every bit of extra income counts.
‘There’s also a range of affordable courses through LinkedIn and similar platforms that you can take advantage of – perhaps it’s time to upskill or diversify your skillset to generate more income?’ says Sunny.
Looking at your current full-time job and negotiating a raise with your employer may also be an option and can aid your ability to save.
8. Cut down on fuel and car maintenance costs
Fuel can be a huge weekly expense, particularly if you own a large car and have significant commutes.
‘Think about public transport options, carpool with colleagues, or try walking or riding your bike,’ says Sunny.
‘Even if it’s just a few times per week, you’ll be amazed at the significant savings that can go directly to your dream home. Plus, you’ll be doing your bit for the environment.’
Are you interested in learning more about the options available to you for purchasing a home?
We can provide guidance and information on various government programs and initiatives that may be helpful, as well as answer any questions you have about the process. Let us help you take the first step towards homeownership.
Let’s chat – reach out to a New Homes Consultant to kickstart your journey today.
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