Saving for a House Dep

Saving for a House Deposit

5 Steps to Saving for a House Deposit

Interested in buying your first home? Read through our guide to get started. We’re here to help if you have any questions.

We outline five steps you can take to help turn the dream of owning your own home into reality.

1.Check your current spending.

Look to see areas that you can cut back. Do you need every subscription you have running? There are many ways to get better deals(check out how) with electricity, gas and insurances. A comparison could save you hundreds of dollars a year and there are many sites to help you with the process.

Sure, it takes a little time, but once you see where all your money goes each month, you’ll be amazed by how many opportunities you’re likely to find for cutting back and saving money.

2.Work out a budget

Be realistic. Better to pay yourself first and only use this money for discretionary spending. Budgets normally fail when you make it too hard. It’s good to have a goal and an endpoint so you can stick to the plan. This timeline will help you stay motivated. ASIC has a good budget planner available which will help you get set up.

3.Get on top of your debts

Prioritise high interest debt first. If you have credit card debt, this is generally the first one to clear. Store credit and car loans are also finance that can hold high interest rates.

When it comes to borrowing money, just remember: Credit is king. Your credit is measured using your credit score—a historical tally of how responsible you’ve been as a credit consumer. Loans and credit cards are now reported to show if you pay on time or how many days late you are. To avoid being late, set up direct debits for loans and credit cards so they are cleared when due.

4.Time to save

The typical house deposit is 20% of the property price. Some lenders will accept a deposit of 10% or even 5%.

Just be aware that a smaller deposit means borrowing more money and therefore paying more interest over time. Also, when your deposit is less than 20% you may need to pay lenders mortgage insurance (LMI). This can add thousands to your costs.

Beyond your deposit (and possibly LMI) there's one more big upfront cost to watch out for: stamp duty. If you're a first home buyer you might get a discount or exemption on stamp duty, depending on where you live.

Saving regular amounts monthly is better than missing one month and saving double the next month. Try and be consistent as lenders will look at your saving history.

5.Get Extra help.

The First home super saver (FHSS) scheme was introduced by the Australian Government in the Federal Budget 2017–18 to reduce pressure on housing affordability.

The FHSS scheme allows you to save money for your first home inside your superannuation fund. This will help first home buyers save faster with the concessional tax treatment of super. You can start saving by entering into a salary sacrifice arrangement with your employer to make voluntary contributions or by making voluntary personal super contributions.

First Home owners grant (FHOG) If you’re a first home buyer and you’re buying or building a new home, you may qualify for a $10,000 grant under the First Home Owner Grant (New Homes) scheme

If you’re a first home buyer, you may be entitled to a concessional rate of transfer duty or even an exemption from paying it altogether under the First Home Buyers Assistance scheme (FHBAS).

Other options are looking for a co-borrower or have someone go guarantor for the loan.

And once you’ve started to save, contact us so we can start by figuring out how much home you can afford — and we’ll help you on your way.