Tips for Saving for a House Deposit

When it comes to saving a deposit for a house, it’s not the easiest thing to do, but that doesn’t mean it can’t be done. If it was completely impossible, nobody would ever own anything. Generally, when it comes to saving, lenders require a deposit of at least 20% of the price of the house. This usually comes with additional earnings to cover any transaction costs, such as government taxes and stamp duties.

If you do have less than 20% of a deposit, you can still get a home loan, but you may be subjected to lenders mortgage insurance and you might have a much harder time demonstrating that you can actually service the loan. While you might be able to afford a high rent and a high loan, you still have to consider other things such as repairs that may need to be done and insurances that you have to pay, which means that your costs are going to go higher than you ever thought.

However, when you get that warranty deed in your hands and you finally own a property, it all feels worth it. With that in mind, we’ve put together a list of tips for saving for house deposits so that you can get the keys for your very own home.

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Make note of your savings goals. You have to have a very clear savings goal in mind so that you know what you’re aiming for when it comes to your deposit. If you figure out the average house price in your desired location, you can check out real estate platforms to find out the selling of the prices in your area and whether you are interested in visiting any auctions. Some people go to auctions for a property because they can’t buy a property outright, but an auction can help them to get it at a cost that’s easily affordable for you. If you have a savings goal in mind, you’ll be able to save up for a deposit based on the worth of the house that you’ve been looking at.
Have a savings account dedicated just for your house deposit. If you’re going to go and save your house deposit, you need to insure that you are putting it somewhere you can’t touch it. Having a certificated savings account can help you here because then once you’ve put the money in the savings account, it’s out of the way. This separation from your everyday funds will reduce that temptation to dip your savings for non essential spending. You can even set up automatic payments.
Get realistic by tracking your income. It’s so important that you understand your income and your outgoings. How much money are you spending on Uber every month? How many streaming services are you paying for? Having to see it all in black and white can be very sobering, especially if you’re not sure where all your money is going every month. Creating a budget that effectively allocates your funds that are not just for bills and essentials but also for some pleasures and savings can help you to avoid feeling deprived. You need to stay motivated throughout your savings journey and every dollar can help.
Figure out whether you are eligible for any government schemes. First home guarantees or regional first home buyer guarantees can really help you to take advantage of anywhere that allows you to buy property. Government schemes can get money off for you and you as an eligible first time home buyer can purchase with a much lower deposit if you have first home guarantees.
Cut down unnecessary expenses. Reviewing your spending habits and looking at ways you can cut back is important. Any small changes such as only dining out once a month rather than everyday or canceling any unused subscriptions can help. You want to add up your savings over time. Redirecting your savings towards your house deposit fund is going to help you to put more money into saving than anything else.
Consolidate and manage your debts. Nobody wants to owe money to anybody, but if you do have debt on the table, you’re not alone. Consolidating these debts into one or at least two manageable repayments can help. Cutting them right back will also mean that when it comes to lenders looking at your portfolio to offer you a mortgage, you’re more likely to get one.

Buying a house is not an easy journey, but once you get started, it’s very difficult to get off that track. You’re going to get addicted to saving your money very soon.