Whether you’re looking to buy your first home, or your forever home, working hard to reach your savings goal through careful planning is a rewarding and integral part of your home buying journey.
The more money you can save, the larger the deposit you’ll have reducing the amount you’ll need to borrow to finance your home.
1. Track your spending
Once you understand exactly how much you’ll need to save for a deposit, it’s time to start planning.
Tracking your spending is vital to achieving your savings goal. Although you might not like what you see, it’s important to understand exactly what you’re spending your money on each week. Only then are you able to identify areas that you can cut back on. Most large banks provide money tracking tools that provide total transparency over your spending.
If you’re a first home buyer, it’s likely that one of your largest expenses is rent. Are there any ways to reduce this cost? Could you consider moving in with family? Negotiating with your landlord or moving to a different area with lower rental prices? Remember, this is not forever and even a small saving on rent each week can make a big difference in achieving your savings goal.
2. Reduce other debt
Now is the time to get rid of that debt that just won’t go away. Car loans, credit cards and other personal loans – try and pay them off or consider speaking with your bank about options to consolidate the debt to reduce the amount of interest you’re paying. Consider if there’s anything you can sell to pay off debt, or down grade your car if possible.
3. Automate your savings
Many lenders require proof that you’re saving regularly before they will consider your loan application. The easiest way to have this ready to go is to automate your savings as soon as possible by allocating a set portion of your income each month to a savings account that’s separate from your transactional account. Soon enough you’ll readjust your spending while your savings grow and grow.
Talk to your bank about your savings goals, they will be able to offer accounts with higher interest rates and incentives for zero withdrawals, helping you to reach your goal faster.
4. Be realistic and set mini goals
Saving for a deposit for a home can take time. Setting weekly or monthly savings goals can keep you motivated and on track. Short-term goals can also help demonstrate how small sacrifices each week add up, and can get you into your dream home considerably sooner than you thought possible.
And remember you’re in this for the long haul. Make sure that you’re able to maintain the spending restrictions - if you’re too strict on yourself and don’t allow a treat now and then, you’ll set yourself up for failure.
The trick is to set savings goals that allow you to build a deposit, as well as enjoy your life.
5. Make the most of Government assistance
If you’re a first home buyer, you might be eligible to receive the First Home Owner Grant (FHOG). The FHOG is an initiative introduced by the Australian Government to support first home buyers when buying or building a brand-new house.
You can use the FHOG to top-up your deposit, helping you reach your goal of home ownership significantly sooner.
The FHOG is administered and funded by individual states and territories across Australia. Each individual local government has its own legislation and criteria for the scheme, and grant amounts also vary depending on your location.
Find out more information about housing grants and incentives.
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