Saving a big enough deposit to buy a first home is tough, especially when house prices rise faster than you can save. The reality is it can take several years to accumulate enough of a deposit to buy a first home. Some first home buyers have found ways to get in early – with a family guarantee or a loan from family members – but for others it’s going to take some serious saving. If you are just starting out with dreams of a first home in the years ahead, here are some ways you can start saving for a first home deposit.
1. Set up a savings account
Most people plan to spend less and save more, but rarely follow up on their good intentions. The key to building a savings account is to decide on a fixed amount that you can realistically save each month. Then set up an automatic transfer into a separate account on the same day that you’re paid.
Your savings account should be an account you can’t easily access – like a notice account or a separate bank account not linked to your Eftpos card – so you’re not tempted to just spend the money you’re trying save! And by setting up an automatic transfer each month, the money isn’t in your account long enough for you to spend it.
2. Find any extra
Good saving habits go hand-in-hand with spending less than you earn. If you absolutely can’t do without life’s little luxuries, consider setting aside a certain amount each week – or even drawing out the cash – to avoid overspending on these. That way you shouldn’t feel as though you’re missing out.
And if you’ve trimmed back all of your spending to the point where you’re unable to make any further cuts, find ways to boost your income and add more into your savings account. Are there are any extra tasks you could take on in your spare time? An extra part time job? Items that you no longer use that you could sell for a little extra cash? Any extras that you can add to your savings account will help.
3. Contribute to KiwiSaver
If you aren’t already doing so, make sure you’re signed up for KiwiSaver. When you save this way, you’ll be able to withdraw all of your contributions and your employer’s contribution, along with any Government member tax credits, as part of the KiwiSaver First Home Withdrawal. You must leave $1,000 in your KiwiSaver though.
And if you meet income and house price caps, you could also qualify for an extra Government subsidy through the First Home Grant. What’s more, your KiwiSaver contribution goes out of your income before you even see it, so it’s a good way to save if you’re not disciplined enough to set up your own savings account.
Start saving today
No matter how big your savings goal is, the key is getting started today with as much as you can afford. If you are a first home buyer and you’re not ready to buy your first home, but you’d like some help planning how to get there, contact a Mortgage Express mortgage adviser. Mortgage Express mortgage advisers are experienced at helping first home buyers understand the nuances of accessing Government support and saving for a first home deposit.