Saving for your first home can be overwhelming. You save and save and seemingly get nowhere. And then, just when you think you’ve got enough, property prices jump again and you’re left with another few thousand to save.
No matter whether you’re a spender or a dedicated dollar collector, saving the significant amount you’ll need for a house deposit can be a challenge. However, if you’re looking to maximise the bang for your buck, there are some handy resources out there to help you.
First home saver accounts
While the boat may have sailed on the government’s generous First Home Buyer Grant, if you’re a first home buyer you still have access to a first home saver account.
First home saver accounts are a tax effective way of saving for your first home. Offering a combination of government contributions and concessional tax rates a first home buyer account can help you can save your deposit even faster.
A first home saver account is different to a regular savings account. By putting your savings into a first home buyer account you’ll only be able to use those savings to buy or build a home that you’ll live in, and you’ll have to keep the account for at least four years. Thanks to changes in the 2010 budget, you can now buy a home within that four year period however your savings must be paid into an approved mortgage.
If you’re not a first homebuyer, choosing a high interest savings account, or a term deposit account may help you keep your fingers out of the honey pot.
Term deposit accounts are considered one of the lowest risk and secure forms of investment on the market. They generally offer higher interest levels and have their interest rate guaranteed for the timeframe you choose however you’ll need a minimum deposit amount - some banks accept as little as $5,000 - to secure in the account for the term you nominate. While this can work in your favour if you’ve got some cash behind you, if you’re struggling to save more than a hundred dollars, you’ll need to find an alternative.
A standard savings account is the simplest way to start working towards your home deposit. Some banks offer accounts that will penalise you for transferring money out of your savings account. But if you’re not the type to let a $5 transfer fee deter you from splurging with your savings, you’re just going to need to develop some self control.
One of the best ways to commit to a savings plan is to have an amount directly debited from you pay each pay period so you never miss it. Think of it as an extra tax. Once you’ve got a decent amount in your account and can see the interest growing you’ll be more likely to leave your nest egg alone until you reach your savings goal.