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When you’re saving up for a house deposit, every little tactic can help. Here are some ways to save smarter so you can buy your first home sooner.

Start with a goal

Buying a home is big financial commitment and saving enough for a house deposit can seem daunting. Having a goal to work towards can make it easier to stick to a savings plan. 

Decide on your savings target

You might want to think about how much you really need for a house deposit.

A commonly desired target is 20% of the property price. If you borrow more than 80% of the property price you might have to pay lender’s mortgage insurance  (LMI), which can be substantial. 

Many lenders will fund up to 85-95% of the value of your property, which means you’ll need a minimum of 5-15% as a deposit regardless of whether you are prepared to pay LMI.

Generally, the more you have as a deposit, the less you’ll need to borrow and the lower your monthly repayments will be. 

Work out how much to save each month

With your savings target locked down, think about how soon you’d like to buy your first home to help you work out how much you need to save each month to reach your goal. Our house deposit calculator could come in handy as you work through your sums.

Mini goals can keep you motivated

The end goal is important but so are mini goals, such as quarterly or yearly goals that you set for yourself. Saving for a deposit can take years and mini goals can help to make sure your savings are on track. Celebrating with a treat or reward when you hit a mini goal can give you the extra motivation to stick to your savings plan.  

You could consider an ANZ savings account to help you set and reach your goals. If you already have an ANZ savings account, you can use the ANZ App to help you set and track goals, including saving for a home.

Know your spending habits

It may sound incredibly boring but the key to saving is having a budget. You need to know how much you’re spending to work out how much you can realistically save without compromising your lifestyle too much. You can use our expenses calculator to help get a better understanding of your spending. 

The ANZ Budget Planner could help you create a budget, and assist in taking control of your spending and reaching your savings goals. If you find yourself falling short of how much you need to save each month to reach your savings goal, you may need to examine your budget more closely and look for potential ways to save.  

Make changes that have a big impact

Think about what you’re prepared to give up and what changes you can make to your spending habits. Some changes could make a much bigger difference than others. Here are some tips that could help you spend less and save more:

  • move back in with your parents, house share with friends or rent a cheaper place
  • pick up a casual job on top of your current work
  • limit how much you spend on dining out, recreation and entertainment
  • make the most of what you’ve got and buy second-hand if you really need something
  • go on a road trip instead of flying interstate or overseas for a holiday
  • tip any work bonuses or other windfalls straight into your savings account.   

Another good tip is to save an amount that is similar to what you would expect your home loan repayments to be, so you can get used to living on that budget.

Get rid of debt

Got a personal or car loan that won’t go away? Or do you juggle a couple of credit cards? 

Paying off your debts as soon as possible can help you save more effectively by reducing the amount of interest you pay over time.

Think about selling your car or downgrading to a cheaper one. You may also want to think about consolidating your debt to help you work towards becoming debt-free. Finally, consider doing away with your credit cards to help reduce unnecessary spending.

Put your savings first

If buying a home is your top priority, then saving for your house deposit should be the first thing you do when you get your pay.

Removing your saved deposit money from easy view and access can help you save so consider making regular deposits into a separate savings account that pays interest. Transfer the money as soon as you get paid or better yet, set up an automatic transfer so you don’t even have to think about it. This way, you’re putting money aside for your deposit before you get a chance to spend it.

This will also make you look good when it comes time to apply for a home loan. Your lender may ask to see a statement from your savings account and you’ll have proof of how good you are at making regular payments.

Grow your savings

You’re saving hard but you need to save smart as well. Get more bang for your buck by maximising the interest you're earning on your savings. You could keep your money in a savings account that pays higher interest than your everyday account. Look for an account that calculates interest daily, and the lower the fees the better.

When your savings reach a sizable amount, you could consider transferring it to a term deposit to earn even more interest and reduce the temptation to spend it.

If you have a few years before you intend to buy your first home and you’re comfortable with the risk, consider investing in shares or a managed fund to boost your savings. You should obtain advice from a financial advisor before embarking on such a strategy.

Give your house deposit a boost

Apart from saving, there might be other ways to get your house deposit quicker.

You should see if you’re eligible for the First Home Owner Grant and first home buyers stamp duty concession (although availability will vary depending on your state or territory).

Asking a family member for a loan or to be your guarantor could also help you buy your first home sooner. Just be aware that being a guarantor is a big commitment that you and your family should think about carefully. If for some reason you default on your loan, your lender could seek to recover money from your guarantor. We recommend that you and your potential guarantor obtain independent financial and/or legal advice if you consider adopting such a strategy, so that your guarantor fully understands the risks of entering into a guarantee.

To sum up 

  • To save up for a house deposit, you need to be clear about how much you need to save.
  • Do a thorough budget to identify ways you could save more.
  • One way to save could be setting up a high interest savings account and make regular payments to this account.
  • Consider paying off all other debts if you can.
  • Consider taking bigger steps to save money, like moving in with your parents.

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