What to Consider When Saving for a Deposit
Swapping your daily coffee for an instant might taste a little bitter now, but putting those five bucks towards your dream home makes it a lot sweeter in the future. But cutting back on coffee while you're saving is an old trope, and while it makes a difference, there are many other changes you can make to build up a deposit for your first home that make a more substantial impact.
The primary financial hurdle to building your own home is saving for a deposit – it's like the gatekeeper that holds the keys to your dream of owning a home. So, by considering ways to make saving for a deposit easier, you can build up the piggy bank much quicker and easier than you might think.
Building a deposit = actively saving
You can absorb all the tips and tricks on building a house deposit, but without actively saving and putting money away, these tips won't have much to work with. The more you save, the faster you can secure a mortgage and start building your home, but also, the more you can accumulate for your home deposit, the less you'll need to borrow and pay interest on, and the more money you'll save in the long run.
Dedicating a portion of your income is a great way to build deposit savings over time. This will mean that you have a smaller disposable income to live with, but once you know how much you can spend per month, you might find it easier to live with a smaller income than you first thought.
Saving can mean different things to different people; maybe you're good at penny-pinching and find a more stringent budget is achievable, or you might be someone who struggles to sacrifice their lifestyle. Whatever the case, there are always pathways to getting you into your first home – follow along with the tips on saving for a house deposit below to see how.
Analyse your situation and current spending and set a budget
If saving is the bread and butter of building a home deposit, analysing your unique situation is the hand-eye coordination of making the meal. You can do this with a financial advisor and by setting a budget, and it usually involves a couple of key ingredients, including your income, disposable income, and current spending habits.
With a little professional help, this analysis will give you the tools to make an informed budget. If you're a lover of spreadsheets, they'll come in handy here as you can set up a system that clearly shows where your money is going. Once you know which of your spending is necessary, you can create an informed and achievable budget that you can stick to while saving as much as possible.
If you can, setting a budget similar to your expected mortgage repayments can be a great idea to help you stick to a long-term system. You can adjust your lifestyle to match this budget now, and you won't have to change much once you're living in and paying off your first home.
Consider a cheaper rental
While scaling back your daily coffees can help, making bigger changes to your spending makes a much more significant impact. For many first-time buyers, rental outgoings make up a large piece of the spending pie. If you're currently paying a lot for rent and have the option of moving to a smaller place or different area with cheaper rent, the money that you save can go directly into your deposit.
If you're renting your own place, you could consider moving into a sharehouse where you split the overall rent with other tenants while still living in your desired location. Or you could go even further and, if it's an option for you, move in with your parents or friend with an extra room while you're working hard to save up.
Keep your luxuries lean
You won't need to give up everything that makes you happy when you're seriously saving, but making some lifestyle sacrifices can really go a long way. Having an honest conversation about what you can do without can help you feel good about keeping your luxuries lean while still enjoying your current situation.
Consider dropping your multiple streaming subscriptions for a single one, reducing your retail therapy to once a month, or even selling your car and using public transport if possible. You can also do a complete inventory of your insurance, memberships, and utilities to determine if you can get a discount or a better deal with another company. It can be a pain to make logistical changes like this, but the long-term gain towards your dream home is worth it.
Swap your travel for local stays
Working hard and having access to less of your income while saving for a house deposit is hard, and you deserve a holiday as much as anyone. But a savvy way to ensure all the hard work continues to support your home dreams is to swap an expensive overseas or interstate holiday with a staycation.
If you live in the city, there is so much of regional and country Victoria to explore, and you can get away for a fraction of the cost while enjoying some world-class experiences and stress relief in your backyard. Or, if you're in a rural spot already, a weekend in the city or by the sea can provide the perfect change of atmosphere to rejuvenate your soul while watching your deposit savings grow instead of shrink.
Take advantage of government help
While it depends on your situation and whether you meet specific criteria, government assistance may be available to help you build your first home. The Victorian Homebuyer Fund won't help you save for a deposit faster, but it can get you into your home sooner and mean you need a smaller deposit for the same house.
With a 5% deposit, you may receive up to 25% of the house's purchase price from the Victorian Government, and they'll receive the equivalent property equity. For Aboriginal and Torres Strait Islander first-time buyers, you only need a 3.5% deposit, and you can receive up to 35% contribution from the government. This saves first-time buyers money by reducing the mortgage and helps them get off the rental market and into their own home faster.
We're here for first-time buyers
The decision-making stage of purchasing your first property always comes with a little uncertainty; it means you're doing it right! Once you've made the important decisions and know which direction you might like to go, it's time to engage with the specialists. First-Place is here to help first-time buyers get the most out of their first property. Space, quality and affordable homes are our speciality. Check out our first home buyer guide and price your home with our home configurator. Get in touch today on 1800 134 778 or enquire to find out more.
Disclaimer
This advice in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs. It is recommended you seek professional advice from a financial adviser before making any important decisions.
First Place is not a financial adviser. You should consider seeking independent legal, financial or other advice to check how the website information relates to your unique circumstances.
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