Saving for a home deposit is becoming a huge challenge for potential buyers, who are juggling higher living costs with shrinking disposable household incomes. We reveal four top tips for locking your money down, sooner rather than later.
While many would-be homebuyers follow traditional methods for squirrelling together their deposit – such as opening a high interest bank account and saving a set deposit of their wages each month – there are plenty of creative strategies you can employ to swell your bank balance in a faster fashion.
Lack of savings is the main barrier to people looking to enter the real estate market, according to a new survey by mortgage broker Loan Market, which confirms that 77% of people don’t have enough cash to offer the bank upon getting a loan.
“First home buyers are back in the market as a result of the interest rate cut and rising rents, and in fact they currently make up more than 50 per cent of Loan Market’s housing finance enquiries,” says Loan Market chief operating officer Dean Rushton.
“But many potential first time buyers don’t get to first base in their quest to achieve home ownership because they haven’t saved enough money for a deposit.”
If you’re one of them, consider these tips for savings success:
- Sell unused assets
Could you get around without your car? Do you need the second fridge you have parked in the garage? And how often do you really use that expensive treadmill that is gathering dust in your lounge room? Unused household goods and appliances can fetch a handsome sum in the second hand trade, so review your clutch of assets and see which ones could be converted to cash.
Keep in mind:Most lenders require evidence of genuine savings for your deposit, so try and plan your second-hand sale for at least six months before you visit the bank manager for a loan.
- eBay your smaller goods
Don’t just look at your larger assets for resale: smaller goods such as CDs, books, video games, children’s toys and collectibles can also generate some stellar returns. If you sell just 25 CDs at an average of $10 a pop, that’s an extra $250 earning interest in your home deposit savings account.
Keep in mind: eBay recently reduced fees for casual users, so your first 30 listings per month are free.
- Convert your hobby into cash
If you love small children, list your services on Gumtree.com as a casual babysitter: you can earn anywhere from $15 to $25 an hour tax-free. Or, if you can sew, create some cute garments or headbands and list them on etsy.com. Whatever your hobbies or talents, look for ways to monetise your spare time.
Keep in mind: It’s important to bank your profits when you’re paid in cash, rather than frittering them away on trivial expenses. Remember, every $50 you save takes you one step closer towards owning your first property. Set a goal and stay the course, and you’ll be a homeowner in no time!