You’ll need to save for a house deposit to achieve the Australian dream of owning a home. Everyone seems to be wanting to dip their toes in the real estate game. All you need is that way in, and then you can stop paying rent, and start paying off a mortgage. Eventually, if it becomes an investment property, that house can be a source of passive income.
There’s no denying how difficult saving for a house deposit can be.
You’ve most likely been extremely frugal with your finances over a number of years, and have managed to put away a good lump sum towards a house deposit. You’ve most likely also had a devil on your shoulder, telling you to take overseas holidays, buy a new car, a new toy… you do have to live your life! But saving for a house deposit doesn’t mean you need a million dollars. The house deposit amount depends on a number of things, including the home loan you apply for, the bank you apply for the loan through, and the property you are looking at buying. This means your house deposit could be anywhere between 5% and 20%, and when you do the maths, the lower end of this spectrum isn’t so much! Of course, having a bigger amount of money as a house deposit will mean that you’ll receive a lower interest rate. The best course of action is perhaps to save what you need. Once you’ve achieved that goal, start looking for your future property, but at the same time, keep saving.
Buying a home doesn’t happen overnight (much like saving for a house deposit), and can often take months of inspecting potential homes, looking online and chatting to real estate agents and banks. While all that’s going on, you can be putting away more and more into your house deposit fund!
How to save for a house deposit
What you really need to save for a house deposit, is discipline and some insight. Below is a short list of a few helpful details to consider when saving for a house deposit.
You can also read more about the subject here.
Budgeting for a house deposit
First and foremost, you’ll need a budget. A strict one is usually better! But you’ll also need to eat and continue with daily life so creating a budget that is realistic and achievable is always best.
Setting a budget doesn’t need to be an incredibly difficult task. Start by jotting down all your income in a spreadsheet or on paper. Now, jot down your spending. Be sure to include every takeaway coffee and every cheeky takeaway meal.
Notice anything? There’s definitely some items on your list that you can live without. Even the takeaway coffee, perhaps you could reduce your coffee intake or have instant coffee. Yes, its not as nice, but the $20 you spend on your single origin brew is eating away at your house deposit savings.
Budgeting for a house deposit — Categorise your spendings
Now take a more detailed look at your spendings and break everything down into categories. For example, what do you spend on your phone and internet every month? What do you spend on food, both eating at home and eating out? How much is rent? How much are utilities on top of that? Add any other categories you think are necessary.
The biggest problem when saving for a house deposit is that we don’t actually realise how much we’re spending on each of these things. That’s why writing a budget and categorising is a beneficial exercise in helping us realise the truth of our finances!
Buying for a house deposit — Conclusion
You’ve got to be in it to win it! In other words, if buying a house is the goal, then saving is what you must do. And if saving is what you must do, then creating a budget is what you need to do! Break it down!
Newstart Homes is committed to helping first homeowners achieve their goals sooner. What’s more? We’re committed to building that first home, and building it to last. We work alongside some of the biggest names in the industry to bring you our reputable designs, including the likes of Caesarstone.
If you’re looking for more information regarding how to save for a house deposit, you can always jump on the government’s ASIC MoneySmart website. There’s an abundance of information available for budding homebuyers. Read more about saving for a home on their website.
Want to know how to double your house deposit in half the time? Continue reading here.