It’s the plight of every first home buyer: saving for that seemingly unattainable deposit. It can start to feel like the harder you try to save, the further away your goal gets. But, if you ever want to have a place to call your own, you’ll need to start saving. Here are our tips to help you get started.
Set a realistic plan
First up, it’s important your expectations align with your budget. That means clearly understanding what you can and can’t afford. Do your research – determine what type of property you could afford, work out your mortgage repayments and any up-front costs, as well as things like insurance, rates, and so on.
Use these projections to set yourself some realistic and achievable savings goals. A good idea is to calculate what your outgoings might be as a homeowner, then deduct what you’re currently paying in rent from that amount, and save the rest. That way you’ll already be committed to paying a certain amount each fortnight, so the transition from renter to home owner is that much easier.
Stick to your savings goals
To help you stay committed, set up a separate savings account. Arrange to have a portion of your salary automatically transferred into your savings account each pay day. That way you’re not tempted into spending your savings and you’re not just putting away whatever is left over at the end of the month.
Talk to your bank about a savings account that offers incentives if you don’t make any withdrawals. Remember, once you have a mortgage, you’ll need meet your repayments each fortnight, so setting yourself up with good saving habits will help you stay committed long term.
Get debt-free fast
While not a savings tip as such, paying off your debt – particularly short-term debt like credit cards – not only saves you on interest payments, it also increases your borrowing power. What’s more, once your debt is repaid, it’s extra money to go into your savings account!
Once you’ve squashed that credit card debt, avoid getting tempted into spending again. Stick to your budget, and avoid spending on non-essentials and impulse items. Try writing down everything you spend money on each week and then calculate how much you could have saved by not spending. Those everyday extras can quickly add up.
When it comes to applying for finance, being able to demonstrate good saving habits could mean the difference between being approved for finance and being turned down. Have you started saving yet? If you’d like advice around financial planning and saving towards a deposit for your first home, talk to a Mortgage Express adviser / broker.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.
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