8 steps to take when you start saving for a house

Saving for a house takes time and discipline. With this in mind, it can be easy to fall off the saving bandwagon along the way, but the important thing is to get up, dust yourself off and keep working towards your deposit goal.

To help you save for a home, we’ve pulled together 8 steps to take when you start saving for a deposit.

Step 1: Start saving early

Are you wondering when to start saving for a house deposit? Well, the sooner you start the better! The earlier you start saving, the closer you’ll be to your savings goal. Plus, the more likely you’ll be to master good spending habits from early on in the piece. 

The better your spending habits, the easier you’ll find it to save a big chunk of cash that you can put towards a home deposit.

Step 2: Set up a dedicated savings account

Some people find it helpful to set up a savings account that’s dedicated to saving for a home deposit. That way you can easily keep track of your progress and how much money you have to put towards a home. 

If you have a standalone savings account for your home deposit, you can even set up regular automatic transfers to continually top up this account. By using the set-and-forget approach, you can take away a lot of the effort of manually transferring money to your account and you might be less tempted to spend your hard-earned cash on unnecessary purchases.

Step 3: Set yourself a savings goal

Starting your savings is one thing, but exactly how much do you need to put away to be able to afford a home? Saving cash is a lot easier when you have a concrete figure to work towards. If you already know the areas that you’re interested in buying in or the type of property you’d like to own, it’s worth doing a bit of research to figure out how much these properties cost and the amount you’d need to save for a home deposit. 

As a general rule, most lenders like to see a deposit of 20%. If you’re struggling to reach the full 20%, that doesn’t rule you out entirely. You might still be able to buy a home, but you’ll also need to stump up for lender’s mortgage insurance (LMI) to cover the increased risk to the bank. 

But the deposit isn’t all you need to save for. You’ll also need to account for other upfront costs of buying a home, like stamp duty, conveyancing and moving expenses to name a few. 

Step 4: Review your finances

Starting your savings journey is a great opportunity to assess your finances to compare your income against your outgoings. Are there steps you can take to boost your income or reduce your expenses? If there are opportunities to cut your expenses, you can redirect those savings towards your home deposit to help you reach your final goal quicker. 

While you’re reviewing your finances, it can be worth calculating your borrowing power to get a better understanding of how much a bank might be willing to lend you. Does this figure align with the properties you’re interested in or are you going to have to make some compromises?

Step 5: Create a budget

Once you’ve reviewed your finances, you can go about setting up your budget. Figure out how much you can afford to contribute toward your home deposit. Once you work out how much you can afford to save each week, fortnight or month, you can calculate how long it will take you to save for your home deposit. 

Just because you set a budget doesn’t mean you have to completely cut out the things you love. Instead, creating a budget is about balancing your necessities with the things that bring you joy while still putting money toward your savings goal.

Step 6: Set a series of mini-goals 

There’s nothing like the thought of having to save tens of thousands of dollars towards a deposit to put you off saving completely. Rather than tackle your ultimate savings goal, it can help to break it down into smaller, more manageable mini-goals. 

You might choose to set up an automatic transfer to your savings account so that it aligns with your payday, whether that be weekly, fortnightly or monthly. Some people also find it helpful to work out a percentage figure, like 20%, of their salary to put towards a home deposit.

Step 7: Celebrate your wins

Once you reach your mini-goals or other savings milestones it’s important to celebrate your success. Whether you choose to treat yourself to a nice meal out, a massage or something else entirely, the point is to make sure you reward yourself with something you value. This can help to keep you motivated throughout the process so you’re more likely to stay on track with your savings. 

Step 8: Do your research

While you’re working on your savings, it can be worth spending a bit of time doing your research on the housing and economic market. Saving for a deposit takes time, so there’s a good chance that things will change in the time it takes you to save up enough to buy a home of your own. 

Stay informed about real estate market trends in your desired location. Keep an eye on the economy and the state of interest rates. You can even use a repayments calculator to work out how much your repayments will be based on the loan amount, term and interest rate. 

By staying up to date with changes to the housing market and economy, you can adjust your plan along the way to make sure you hit your ultimate savings goal and secure the home of your dreams.

Remember, the key to saving for a house is consistency and discipline. Adapt your plan as needed along the way, and be patient as you work towards achieving your homeownership goal. And don’t forget to keep your eyes on the prize. This can help you stay on track with your savings when you’re tempted to stray from your goals.

For more information on buying a home, check out our great range of clips and articles. 

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This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍

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