Saving for a deposit can seem like a daunting prospect, especially if you’re a first-time buyer. But, with some simple strategies and tactics, it doesn’t have to be.
1. Estimate how much you need to save for your house deposit and other upfront costs.
Knowing how much you need to save can help you focus on your goal and stay motivated. You can use an online home loan calculator to estimate how much you might be able to borrow, and how much you would need to put towards the deposit.
2. Set your goals and stick to them
The hardest part of saving for a house deposit is sticking to it when the going gets tough. Having a clear goal will keep you motivated and prevent you from making excuses to spend money that you don’t have.
3. Track your spending
Taking the time to write down your expenses can help you see where your money is going and what you can cut. It also gives you a chance to plan and budget your savings.
4. Put your savings away as soon as you get paid
Diligently putting aside any extra funds at the start of each month is one of the most effective ways to save for a house deposit. If you have trouble keeping up, consider setting up an automatic withdrawal from your main account into a separate savings account.
5. Maximize interest on your savings
Having a savings account that pays a higher rate of interest than your everyday account can help boost your down payment fund. Look for an account that calculates interest daily and offers low fees.
6. Put your down payment savings into a certificate of deposit
When you have a big chunk of your house deposit saved, you could consider opening a certificate of deposit (CD). These are typically timed to mature around the point when you expect your mortgage deposit to be in place.
7. Save as much as possible
You may be tempted to impulse buy, but resisting that urge is the best way to save for a deposit. If you find yourself grabbing the latest TV or new smartphone, try to match your purchases with an equal amount that goes into your savings.
8. Make your goals small
Saving for a deposit can be a long-term process and it can take years to achieve your goal. So, you might want to set yourself mini goals, such as quarterly or yearly ones. Having little goals can motivate you to reach your end goal and give you a reason to celebrate each success along the way.
9. Don’t be afraid to ask for help
Getting a second job or downsizing your life can be an effective way to save for a deposit. You could also ask family or friends for support to help you get there.
10. Save smartly
If you’re a long-term saver, consider investing your down payment savings in shares or a managed fund. These types of investments offer a better return than most savings accounts and are more risk-tolerant. But, you should always seek professional financial advice before committing to a specific investment strategy