Interest rates are the lowest they have ever been and this is attracting many more buyers to the housing market. If you’ve decided that the time is right to buy, then you need to get a deposit together. Here are some tips to help you reach your goal more quickly.
Establish two accounts: for every day transactions and savings
One of the first things you need to do is work out what your financial position is by calculating all the savings you have available to put towards a deposit.
Once you have done this, set up two accounts: one for your everyday transactions that you use for your living expenses and one which you will be transferring all your home deposit savings into – this one should preferably be a high interest account.
If your employer permits you to, split your pay so that only the amount you need to live on is deposited into your everyday account. The balance can then be deposited into your savings account where it is out of sight and out of mind so you don’t miss it.
Are you eligible for government assistance?
Find out what government assistance you may be eligible for. If it’s your first home, you could be eligible for the federal government’s first-home buyers’ grant or stamp-duty exemptions. If so, don’t forget to factor it into the total amount you’re saving for, as this will reduce the overall amount and means you reach your goal much more quickly.
Pay off any outstanding debt
This strategy is two-fold. If you have credit card or personal debt, it means you are allocating some of your income to interest repayments when you could be using this money for your home deposit. And the less debt you have, the more your lender will lend you.
Set a budget and stick to it
While working out a budget is perhaps one of the most tedious tasks around, it does help to know how much you’re spending so you can work out how much you need to save. Don’t forget to put everything down – the annual insurances, current rent, medical costs, and entertainment expenses. Allocate yourself enough to live on and try and do without too many luxuries or treats. This will help you reach your savings goal more quickly. When you’ve done your budget you will be able to see how much you have available to save.
Start a regular savings plan
Once you know your savings capacity, start saving. Contribute a set amount – try and make it the same – into a dedicated savings account each month. If you find yourself with spare cash at the end of the month, contribute this into the account as well.
Tweak your spending
When you are saving for a house there’s no getting around the need to make some sacrifices, but they don’t have to be drastic. There are plenty of ways you can tweak your spending. For example, try and go to the movies on the cheap night, don’t catch taxis when you go out but rather drive your own car and limit your drinking, or try shopping at markets for cheaper food items.
Set a deadline
There’s nothing like a deadline to keep you focused on your savings goal. Set a date for when you would like to have saved a particular amount and this will give you something to aim for. If you don’t have a date in mind it is very easy to let time pass without making any progress.
Earn extra income
If it’s possible through your work, try and earn more money. This might be through working extra hours. Another option is to take up a part-time job. This could be related to your own work – maybe through consulting – or it could be something like baby-sitting or dog walking. Selling unwanted items on eBay is another popular way to bring in some extra dollars.
And while during this time you are likely to have to make some sacrifices, the point to remember is that it won’t be forever - so think of it as a little bit of temporary pain for a huge gain.
Will Keall, iMortgage’s general manager, has a wealth of marketing and business development experience gained in Australia and the United Kingdom. These include high level roles in a range of sectors such as financial services, insurance, travel and tourism, motoring and professional services.
Will played a pivotal role in the successful establishment of iMortgage. His dedication and passion for the mortgage industry have won Will the utmost respect as an integral part of the iMortgage brand.
A self confessed “numbers and brand geek”, Will calls himself a conservative investor with a long-term philosophy. He also believes it’s important to “love where you live.”
Will is a cricket and football tragic, who also enjoys running.