How to save for that house deposit
Buying your first house isn't necessarily just a matter of being frugal. For example, it might be the case that salaries may not have kept up with the pace of property prices in some major cities and regional centres. Given this, what options are there for those wanting to get into their first home?
Here are some tips for pulling together a house deposit.
| Move in with the folks |
| So this one could hurt a little but with rent generally being our biggest expenditure it’s also where you could make the biggest savings. If you are in Sydney, the median house is at an all-time high of $530 a week, according to the Domain Group Rental Market Report. This comes in at a cool $27 560 per year. Now that may just be worth every cent for your freedom but it could be a major hurdle when it comes to saving for that house. Given that the average household energy bills come in at around $5000 before you even include the phone bill and you are over the $30 000 mark. That is a sizeable sum that you could potentially save without making any other cut backs to your lifestyle. Do this for 3 years and you could have a tidy $90 000 house deposit. If that is just too grim to bear, consider house sitting long term and only crashing at your parents when you have to in between house sits. You will usually have to cough up for the utility bills but you might just land yourself a long term house sit in a posh suburb. No lifestyle downgrade needed. You could try Aussie House Sitters or Mind a Home. |
| Get rid of outstanding debt |
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Pay down as soon as you can any debt that you might have. Any debt you have will impact the amount you can borrow. It’s best to apply for a loan with no debt hanging over your head at all. |
| Make thrifty fun |
| You’ve got to admit, thrifty and healthy is becoming all a bit cool these days. You can easily garner some cool cred with some op shop denim, 70’s recycled boots or even a budget health kick. Make a commitment to take your lunch to work. Soups are a great winter lunch staple—make a pot on Sunday and you could have lunch for a week. Make up a yummy salad for lunch each day in summer and pile up the pounds in your bank account, not on your hips. Try sipping on fruit water instead of takeaway coffee at work whilst sprouting the health benefits and then when no one is looking pop that $4 into a jar. Cutting that coffee each day could save you over $1000 per year. |
| You just gotta save |
| Now there is no point in making all these cuts if you don’t actually put aside the money you have saved. Make sure you put your savings away first and live on the remainder. Too many people try and save what is left at the end of the month but the harsh reality is that generally if you do that there will be nothing left at the end of the month to save. |
| Figure out how much you need |
| Be realistic. You may need to consider a smaller property, an older property, or a property in a different area, just to get you started in the property market. Use our mortgage calculator to work out how much you can afford to borrow. The general recommendation is to save a deposit of 20% or more of the purchase price of your home to avoid paying lenders mortgage insurance (LMI). (Source: Moneysmart) however, there are different lending options depending on your personal circumstances. |
The advice contained in this article is general only and has been prepared without taking account of your objectives, financial situation or needs. Before you act on this advice you should consider the appropriateness of this advice in regard to your objectives, financial situation and needs. You should consider the relevant Terms and Conditions or Product Disclosure Statement before deciding whether any of our products are suitable for you. You should also consider seeking professional legal or financial advice.
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