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Tips on saving for a house deposit

For many of us, owning our own home is a big lifetime goal. But with rising house prices, it’s becoming increasingly difficult to enter the housing market. Even if you are in a position to service a mortgage, putting together enough savings for a deposit is a challenge. Here are some tips for saving up so you’re ready to go on auction day.

Prepare a budget

When you’re planning to buy your first home, you need to have a clear idea of how much money you can feasibly put together for a deposit. A big part of this is having a strong understanding of your current finances. Preparing a household budget is a great way to get an overview of your financial situation and see the areas where you can make potential savings.

Put together a budget to see how much money you have coming in and going out each month – this will determine how much you can afford to save regularly. It will also help you decide how much you want to try to save up for the deposit, and how long this is likely to take.

Automate your savings

If you’re someone who spends their pay cheque as soon as it hits their bank account, you may want to consider automating your savings so that money is stored away without you having to think about it. Set up your online banking so that a set amount is transferred to savings on pay day. This method lets you save without even noticing it!

Look at government schemes and grants you may be eligible for

The Federal and State governments have both invested in schemes designed to make it easier for first homeowners to get into their first home. Research the options that are available to you and remember that there are different rules for each state and territory. These grants may assist you by providing a lump sum, by reducing how much you pay on stamp duty, or by allowing you to buy a house with a smaller deposit than usual (as low as 5% of the purchase price).

Consider how you’re growing your money

A lot of us leave our savings sitting in our bank account and add to it as we can. But there are ways to make that money grow faster. Consider moving your deposit savings into a term deposit or high-interest savings account. These earn more interest, so your savings increase each month without you doing a thing.

You can also consider investing in shares or managed funds to help grow your savings into a larger amount that you can draw on when it comes time to pay a deposit on your new home. It is worth noting though that growth through investment is not guaranteed, and you have to be comfortable with the idea that your money might be worth no more – or even less – than when you began.

Sally Writes 24 Nov 2020