Taking the guesswork out of saving for a house deposit

Buying a home is an exciting time, but that doesn’t take away from the fact that you’ve got to save up a tidy deposit before you can buy. When you’re staring down the barrel of starting to save tens of thousands towards a house deposit, it can be tricky to know where to start. Sure, the aim is to grow your nest egg, but are there any tips or tricks you can use along the way to supercharge your savings?

We’re here to give you the lowdown on the different tips and strategies you can use to help save for a house deposit.

How much do you need to save?

Getting the ball rolling on your savings is all well and good, but it really helps to have an end goal in sight. Even if it’s just a rough estimate, it’s better than nothing.

To work out your savings goal, have a look at the prices for the different types of homes in the areas you’re interested in. As a general rule, most lenders suggest saving at least 20% of the purchase price as your deposit. While you can still often buy a home with a deposit under 20%, you’ll generally be up for lenders mortgage insurance (LMI), which can add thousands to your mortgage but it can help you get into the market sooner.

Unfortunately, the buck doesn’t stop with your deposit. There’s a stack of other upfront fees that you need to account for when buying a house too. From stamp duty and building and pest inspections to conveyancing and mortgage registration fees, it’s important to work these expenses into your calculations so you make sure you save up enough.

You can use our borrowing power calculator to get a rough idea of how much you can afford to borrow. 

Start budgeting

Budgeting doesn’t have to be boring. Plus, it’s one of the best ways to work towards your deposit goal. One recommendation is to spend a bit of time assessing your income and outgoings to help you set a realistic budget. And you can also reward yourself for reaching your mini goals along the way.

Once you figure out how much you need to save towards your home deposit, you can break it down into smaller, more manageable amounts. Setting mini goals can help to keep you motivated along the way, especially if you reward yourself with a little treat for your efforts. 

Setting up an automated transfer on a regular basis, whether it be weekly, fortnightly, or monthly, is a great way to make sure you’re constantly boosting your savings. Plus, having a consistent savings history is often a big tick for lenders when it comes time to apply for a home loan.

Assess your spending

While we’re on the topic of budgeting, it’s well worth taking a good, hard look at your spending habits. Are there areas where you cut back on your spending and potentially redirect those extra dollars toward saving for a deposit? Cutting back on costs like subscriptions, eating out or new clothes can be a great place to start.

Reducing non-essential spending will become more important as you get closer to your deposit goal and buying a home. Banks and lenders will often assess your spending habits, so if you’re able to start developing good habits earlier on, it can help to set you up for saving success in the future.

Reduce your debts

Are you juggling credit card debt, a car loan or a personal loan? Having debt can affect your borrowing capacity when it comes time to apply for a home loan, so it’s worth chipping away at it early on in the piece. Plus, the more money you’re spending on paying off your debts, the less money you’ll have to put towards your home deposit goal.

Negotiate your bills

Sometimes it can be worth giving your service providers a buzz to see if it’s possible to get a discount on your bills or swap to a cheaper plan. From utilities and insurance to your phone and internet bill, you might be surprised at how much you could save just by asking the question. And if they’re not willing to budge, don’t be afraid to take your business elsewhere if it’ll save you a few bucks. It all adds up and these savings can be redirected towards your house deposit fund.

Explore assistance programs for first homeowner

If this is your first time buying a home, there could be a few programs out there to help you get your foot in the door of the property market. Depending on where you live, you might be able to take advantage of the First Home Owner Grant (FHOG). With the FHOG, you could receive anywhere from $10,000 to $15,000 towards the purchase price of a new build. Each state and territory has its own set of rules when it comes to the FHOG, but you can check the eligibility criteria on their websites.

As a first home buyer, you might also be able to benefit from the stamp duty concession offered by your state or territory government. Depending on the price of your home, stamp duty can add another 3-5% on top of the purchase price, so you could be in for a huge saving with a concession. Eligibility criteria apply, so be sure to check your state or government website for more information.

Please note that Unloan is not an Agent for any Government Concessions or Grants, if you are looking to use any of the eligible grants, please contact your conveyancer or relative Office of State Revenue.

Saving for a home deposit takes time and discipline, but it’s absolutely worth it in the end. To learn more about buying a home, check out our collection 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.‍

Unloan is a division of Commonwealth Bank of Australia.

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