Short-term sacrifices for long-term security: how to save for your home deposit
Buying your first home requires planning and saving, and a deposit is the cornerstone, says Homes of Distinction CEO, Jonathan Broekman. It gives potential home buyers the boost they need when applying for a home loan, as banks will consider it favourable if you have a better deposit to put down, and your affordability score will rise.
While saving towards a deposit can seem almost impossible in today’s tight economic climate, there are lots of little things you can do to make a big difference.
- First do the sums - You need to know exactly what amount you’ll need for the deposit and other up-front expenses that come with buying a new home. To work out what you can afford ask yourself how much you need for the house you want, versus what you can realistically save each month.
- Open a dedicated account - If you put ‘rainy day’ money away each month in a general savings account, it can be unclear how much you have saved for deposit purposes.
- Get investment savvy - A great way to bolster your savings could be to make some investments with the money you already have. Consider purchasing some shares, or investing in a mutual fund - depending on which shares you purchase, you could increase your earnings at a faster rate.
- Change your cellphone package - don’t upgrade every opportunity, and try use wifi at home instead of expensive data bundles.
- Switch your supermarket - shop at a cheaper market, watch out for sales, and carefully consider if going housebrand versus name brand is worth the savings.
- Examine your insurance - that doesn’t mean going without coverage! But you might want to revisit the cover you have and compare premiums to save on overall costs.
Like any good investment plan, Jonathan reminds us that saving for a deposit takes time and patience, but in the end being able to put down a better deposit will result in lower instalments and less interest over the loan period, making paying off your bond more manageable and rewarding. Keep your eye on the prize, and you will find making the short-term sacrifices are well worth the ultimate long-term rewards!
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28 Aug 2017
Author Georgina Roberts