When thinking about buying your own home, one of the first things to consider is saving for the deposit. The recommended deposit amount is generally 20% of the property price. Smaller deposits can be accepted but may incur an extra charge of Lenders Mortgage Insurance. Also, the bigger the deposit, the smaller your loan amount, and the less interest you will pay.
While that may seem like an impossible goal, once you get into a routine of saving and being smart about your spending, you could be walking through your own front door sooner than you think. Here are our top tips to start saving for your fist home deposit.
1. Save the first 10% of each paycheck
Sounds easy enough, right? If you’re prepared to stick to it, it is a guaranteed way to save, as you pay yourself before paying anyone else.
It is a good idea to set up a designated savings account, where you can transfer 10% of your pay as soon as it comes through. If you’re not a great saver or lack a bit of self-discipline, a good idea is to open this savings account with a different lender to the one you usually bank with, and don’t get a debit card connected to the account. This makes it difficult, and less tempting to access the money.
It may take a bit of getting used to, as you might find yourself skipping those restaurant meals or bought lunches towards the end of your pay period, but once you’ve done it a couple of times, it gets much easier to manage.
2. Pay off any debt
So this one isn’t exactly a straight up savings tip, but you will end up saving money on interest repayments. Personal loans and credit cards can be big money traps and easily can get out of hand if they aren’t managed properly. Paying off your debt will not only increase the amount you will be able to borrow, it will also mean you aren’t trying to find money each month to pay off the small loans as well as your mortgage.
3. Track your spending
Not sure on where you can find that extra money to save? For one month, record and analyse every dollar you spend. From car insurance payments, to grocery shopping, a night out and take away cups of coffee. Be accountable for every dollar you spend.
At the end of the month analyze your records. You will be amazed at where your money has been disappearing. This will help you greatly to be able to budget your money for different areas and finding out just where you can cut back.
Make sure that the money you save when cutting back, goes straight into your savings account. Just because you save money by not eating out each week, doesn’t mean you get to buy that new pair of shoes.
Not only is decluttering good for yourself, it is an easy way to make some quick cash. With outlets like eBay and Gumtree, and many different Buy, Swap and Sell pages on social media, selling your unwanted and unused goods has never been easier. Set a weekend aside and head out to the shed or spare room. Anything that isn’t of sentimental value and hasn’t been used in over a year, is usually a good indication of what you can sell. Take a few shots of each item, place them online and let the money come to you.
Not only are you getting money for things you aren’t using, when the time comes, it will make moving house so much easier!
5. Make an appointment with Mortgage Choice Unley
Once you’ve decided the time is right to start saving for your home deposit, you can make an appointment with us. Our expert brokers will be able to let you know what requirements you need before you can apply for a loan, what loan repayments might look like in a range of scenarios, how any debt could affect your chance of getting a loan, and can also apply for a home loan pre-approval if your savings are getting close to the required amount.
Owning your own home is closer than you think, and we can guarantee that after an appointment with us, you will leave feeling motivated to save!
Call us today on 8273 7970