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Saving for your deposit

Saving for a deposit is a key step in home ownership. You will need some savings – usually at least 5% of your home's purchase price (also referred to as your Loan-to-Value Ratio or LVR).



Saving your deposit

Whether you’ve got no money put aside for your deposit, or you’ve been saving for years, we can help you evaluate your options. Some lenders will even allow you to buy a property with no or very little genuine savings, when a family member acts as a security guarantor.

We can help get you on the right track and into the property market sooner. Watch this quick video to find out how.

Advantages of a larger deposit

A bigger deposit gives you big advantages

Building a good deposit shows that you have a strong saving history, something lenders like to see.

Save on monthly repayments and interest

The bigger your deposit, the less you have to borrow, and that means lower monthly repayments. You'll also pay less in long term interest charges - money you could use to invest or renovate your home.

Better choice of lenders, lower rate

Some lenders will want to see more than a 5% deposit, so having a bigger deposit gives you a wider choice of lenders and could help you to negotiate a lower interest rate.

Reduce Lenders Mortgage Insurance

If your deposit is worth less than 20% of the property’s value, you have to pay Lenders Mortgage Insurance which adds to your repayments and interest bill.

How much do you need to save?

Fast-track your deposit

1
Establish a budget

This will help you see where you can cut back. Try saving the difference between your rent and your estimated future mortgage repayment so you know it's manageable.

2
Set a savings target

Saving is always easier when you have a clear goal. Check out our ‘Achieve my Savings Target’ calculator.

3
Add any windfalls

Add your tax refund, work-related bonuses or financial gifts to your savings pool.

4
Now put your money to work

Don't just save money, make it work hard in a high interest savings account.

5
Set up an automatic payment to your savings account

This will ensure your money is saved before you’re tempted to spend it.

6
Reduce debts

Lenders will want to know about your other debts (e.g. car loan) as well as your credit card limits, not just the outstanding balance. Paying off other debts or reducing your card limit can improve your chances of loan approval.

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How much could you save?

Are you trying to save money for something big, but you’re not reaching your savings goal as quickly as you would like? Don’t worry, you are not alone.

Use our saving tool to estimate how much you are spending every year on the little items, like transport, entertainment, food, and exercise, and find out how much you could save by finding cheaper alternatives!

Planning your budget

Preparing a budget is the first step to understanding how much you can afford to pay off each month/week, and along with your deposit, this will determine a suitable price range for your first home. A golden rule of a clear idea of how much you can comfortably afford to repay - even if interest rates rise.

Write down everything you spend over a couple of months/weeks, so you can learn exactly where your money is going (e.g. rent, mobile, Foxtel, electricity, gas, car running costs, groceries, gifts, clothes, insurance etc).

Make sure you are honest about your expenditure and what things cost - it's better to overestimate rather than underestimate so you don't get caught short. If you don't know exactly how much you spend on something, e.g. electricity, make sure you review past bills and calculate annual costs to determine an average amount. And don't forget to factor some 'fat' into your budget for surprises (e.g. the unexpected night out).

Once you've finalised your budget, check your bank records and reflect on your strategy regularly to make sure you're meeting your financial goals.

Use the Mortgage Choice Budget Planner to help you draw up your personal budget.

Things can change quickly in the market.

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