SAVING FOR YOUR FIRST HOME DEPOSIT
If you want your very own piece of paradise, even if this is a 2 bedroom semi attached flat, the hardest part of the property ladder is getting on the first step. Saving for a house deposit takes time , commitment and hard work. BUT once you are on the ladder, moving up is easier. The saving of the initial deposit is often the hardest part in the process of home ownership.
Here are some tips to get you on the track:
- Save a % of each pay packet – Set up an AP so each time you receive your weekly/fortnightly or monthly pay, a % goes straight into your home deposit savings account. Start with 5% and if you can manage that easily, increase it to 10%. Money may seem tight for a while whilst you adjust, but will be very beneficial in the long run. If receiving $1000 after tax each week from work, 10% would be $100. Over an entire year (52 weeks), you will have saved $5200!
- If you don’t use it, sell it – There is no point in having expensive items you don’t use (or wear!). Sell them on and put the money you make directly in your home deposit savings account.
- Pay off your debt - Paying off your debts makes sense for two main reasons: it will increase the amount of money you can borrow, and it will free up your cash to use towards mortgage repayments. You do not want other debt lingering around when you have a mortgage for several hundreds of thousands of dollars.
- Remove the “wants” and luxuries – Budget your week, so that you don’t just get on the spending rampage. Make your lunch rather than buying. You may increase your weekly grocery bill by $50 or so, but that will stop your spending $15-$20 on lunch each work day. Think about your expenses – could you cut back on your paid TV, could you skip your annual skiing holiday? Make a few cut backs. No fun, but worth it in the long run.
- Give Mum & Dad a call – often when you are saving for a home deposit, paying rent is hard to do as well. How about bunking back in your childhood room, sure you will have to pay a board but it’s likely to be far less than your current rent. It may seem like a step back but in actual fact it is merely a stepping stone towards home ownership.