How to Save For Your First House Faster
Saving for a house deposit is no easy feat and requires some sacrifice and a whole lot of discipline, especially if you want to do it fast. Every tactic helps and that's why we've made this blog to be your guide to start actioning some ways to save smarter and buy your first home sooner.
How Much Do You Need for a House Deposit?
While there is no definitive answer to this question, we believe the bigger home deposit, the better. Generally, a big deposit shows lenders what a great saver you are which could increase the likelihood of your home loan application being approved. It also means not having to borrow as much money, paying less interest over the life of your home loan and paying off your loan sooner.
In order to establish how much you can borrow for your home loan, try using our borrowing power calculator.
How to Start Saving For a Home Deposit
Now that you have a good idea of how much you need for a deposit, you can start putting together a plan to save for a house deposit. A desired target to reach is 20% of the purchase price of the property which will help you to avoid lenders mortgage insurance (LMI) and paying off a bigger loan.
Prepare a Budget
The first step to help save for a deposit is to get your finances sorted with a budget. Everything from you and your partner's income to living expenses and even how much you spent on the weekend should all be recorded in your budget. You can use our budget planner calculator to visualise your income and expenses in order to better budget before buying your own home.
Develop Better Spending Habits
Once you've created a budget that covers all the important expenses, you can better work out how much you can save without putting too many restrictions on your lifestyle. Some useful things you can do today to save money include:
- Limit how much you spend on dining out
- Make the most of what you do own and buy second-hand if you really need something
- Buy home brand versions of essentials such as milk, cheese, bread etc.
- Cancel any unnecessary subscriptions such as streaming services, magazines etc.
Set a Savings Goal
Having a goal to work towards can give you the motivation you need to stick to a savings plan and help determine how soon you could buy your first home. While the end goal is important, so are the mini goals we set along the way, such as monthly or yearly goals. Even though we're aiming to do it faster, saving for a deposit can still take time and mini goals are great milestones to make sure your savings are on track. Try celebrating with a reward when you hit these mini goals to give you a boost in motivation to stick to your savings plan.
With our savings calculator, you can project how much you can accumulate over time with an initial amount and ongoing contributions.
Open a Savings Account
It’s not just how much money you save that’s important, it’s where you put your money that can influence how quickly your savings grow. Consider making regular deposits into a separate high interest savings account that offers you a high interest rate, with low or minimal fees. The money that goes into this separate savings account will grow faster compared to an everyday account which usually pays no interest.
More Tips to Save For Your First Home
Consider a Second Job or Side Hustle
Earning more money from a second income is a great supplement for your savings goals because you can put every amount you earn, straight into your savings bank account. This can be anything from driving for a ridesharing or food delivery service through to walking dogs and pet sitting, or even offering your specific creative or artistic skills.
Get Your Debt Under Control
If you have any outstanding loans that you are paying money on – a car loan, for example – then getting these under control can mean you will pay less in interest in the long term, leaving you with extra money to put towards saving for your new home. If you have multiple debts, you may find it worthwhile to consolidate some of them into one, which could potentially help you reduce the fees you pay and simplify your loan repayments.
Check Your Eligibility for Government Assistance
Aspiring first home buyers a number of government grants available that may help to save some money and get into a home sooner. The grants, concessions and schemes you could be eligible for include:
- First Home Guarantee (FHBG) - Formerly known as the First Home Loan Deposit Scheme, this government-backed scheme has low-deposit (as little as 5%) home loan options available. From 1 July 2022 to June 2023, 35,000 FHBG places are available to eligible first home buyers.
- First Home Owner Grant - New buyers eligible for this grant can get $15,000 towards buying or building a new house, unit or townhouse (valued at less than $750,000).
- Family Home Guarantee - Starting from 1st July 2021 and ending 30th June 2025, this scheme aims to help single-parent families get on the market with their first property with as little as a 2% deposit for a home.
- First Home Vacant Land Concession - Allows you to claim a concession for stamp duty when acquiring vacant land to build your home (valued under $400,000).
Now that you've gained some useful tips to help you save up for your first house faster, check out the First Home Building Mistakes to Avoid to really streamline the process and move into your dream home sooner rather than later.