Save for your home loan deposit the smart way

Saving a deposit for a first home loan can be a real challenge, especially if you haven’t had to exercise such financial discipline before.

Indeed, it may well be the biggest obstacle for many when they decide to become a property owner for the first time.

That is why it is important to set in place a strict yet achievable plan which enables you to reach your savings goal without going crazy in the process.

Knowing how much you need to save is very important – having a target will motivate you and encourage you to keep up your savings as you get closer to your objective.

Mortgage brokers can discuss your options with you and give you an idea of your borrowing capacity. They can tell you what your repayments will be with different combinations of home loans and house prices.

This should give you a clear idea of your price range. The deposit you need to save will vary depending on the mortgage product, but will usually be between five and ten per cent of the purchase price.

With this goal you can then work out a budget by examining your income and expenses and finding ways to boost your savings.

You wouldn’t expect to save a home loan deposit without some hard work, so now is your chance to make a real difference to your financial future!

Work out ways to reduce your expenses so that your savings go up as a result, even by a small amount. This could mean simply making your lunch every day instead of buying it, or going all out – selling your car and buying a bicycle to get around on!

Wherever you find savings, be consistent. Keep to your plan. Consistent savings will demonstrate your commitment both to yourself and to potential lenders when you start applying for loans.

As your savings mount you can even put them to work in a high interest savings account, a term deposit or another investment strategy.

What is certain is that the sooner you start, the sooner you will reach your savings goal.