Steps to Save for a House Deposit

By Anouska Linz
When it comes to purchasing a property, the first steps can be the hardest particularly if you are not taking the right steps. Before you can take out a home loan, lenders need to see that you are able to save money for a deposit yourself. So how can this be done?  Listed below are four important steps:
1. Create a plan
Trying to buy a house without a sense of direction can make the process long and frustrating. Before you start saving for a deposit, you should know what goal you are working towards. For example, do you know the price range you are looking to buy in or what your maximum limit would be? Are you planning to start a family soon or thinking about changing your job/career within the next year? All of these things can affect your incoming cash flow and your ability to make mortgage repayments. 
This is the time to sit down and work out how your financial situation might change within the next few years to see if you are ready and capable to take on a mortgage.
2. Use a second account
It can be very tempting to spend money when you know it is in your everyday account. This is where a savings account can come in handy. Firstly, there is no card, so you cannot withdraw money at an ATM and secondly, if you withdraw from that account, you may be exempt from receiving the bonus monthly interest.
Many financial institutions have specific savings account for this exact purpose. But make sure you shop around to see what bonus interest rates are on offer and importantly, if there are any ongoing fees involved.
3. Pay off any debt
One of the biggest factors lenders consider when looking at your application is your financial commitments. So, if you currently have a lot of debt in the form of credit cards or other loans, it may affect your serviceability. It is also important to note that with any credit cards you have, lenders will assess your situation as if they were maxed out, even if there is no money owing on it.
Therefore, before you apply for a home loan, make an effort to reduce your outstanding debt. Make a list of your financial commitments and start by paying off the debt that has the highest interest rate. You may have to tighten your budgeting belt, but reducing your debt could help improve your chances of getting a more competitive loan.
Paying off any existing debt will also help give you a clean slate and focus on putting more towards mortgage repayments.  
4. Reduce extras
It is amazing what you can save when you cut back a little. There are several extras that don’t seem like much money, but can save you thousands over the course of a year. Some examples are:
  • Movies and dinner every weekend 
  • Buying lunch at work. 
  • Foxtel/Austar
You don’t need to become a hermit to save money, however saving for a deposit will happen a lot quicker if you make some sacrifices. If it is too hard to go cold turkey on all luxuries, slowly remove each extra over the course of a few months and see which one saves the most money. 

Anouska Linz is Manager, Online Sales at State Custodians and has over 10 years’ experience in financial services, both in broking and banking. Holding a bachelors degree in accounting, Anouska quickly discovered a love for mortgage lending and assisting people to achieve their home ownership goals. She leads a team of highly experienced lending specialists who are passionate about finding lending solutions which result in real wins for the customer. She is also a massive netball fan.

For more information on our home loans, visit or call 13 72 62.