Buying a house is an exciting and memorable milestone. It can also be a life-changing step towards financial freedom.
Saving for a house deposit can be an arduous task, often taking years to do. However, it’s important to remember that it’s worth it in the long term.
The more you save, the less you have to borrow. The less you have to borrow, the less you will have to pay in interest over the life of your loan.
There are many different ways to save for a deposit, many of which don’t require a drastic change to your lifestyle. Nonetheless, it does take some discipline, determination and often sacrifice.
If you’re focused on saving for your first home (or even a holiday overseas) follow our simple saving tips that will help you get there faster.
SET GOALS – WORK OUT WHAT YOU CAN AFFORD
Setting goals is the best way to eventually buy your own home. It’s important to be realistic when setting saving goals for yourself or your family as a whole. If your goals aren’t achievable then you won’t ever get to where you want to be.
Set short terms goals. For example, calculate the amount you need to spend on rent, bills, food and transport for the week, as well as anything else you might need. When you know this, you can then set yourself an amount that you’re going to save each week.
These short term goals will allow you to then set long term goals because you will know how much you can potentially save each year.
MONITOR YOUR GOALS
If you write down your saving goals you can continue to asses and reassess them throughout the saving process.
This is an easy way of keeping track of how much you’re spending and how much you’re saving. It will also give you an idea of the things you’re buying, but don’t necessarily need.
CUT BACK ON EXTRAS
Some things you may be able to cut back on are buying your lunch, going out for expensive dinners, buying a coffee every morning or paying for a gym membership you don’t use.
DO YOUR RESEARCH – STAY UP TO DATE
If buying a house is your long term goal, it’s important to know and understand the property market before you enter it. The property market is always changing, therefore it’s important to educate yourself and stay up to date.
You can do this by going to auctions, reading the property section in your local newspaper or monitoring online real estate websites.
Don’t forget to also talk to people who have been through the process. Your parents and friends can be a wealth of information and they can talk from experience.
GET RID OF OTHER DEBT
When saving for a home loan it’s important that you don’t have other debt holding you back. This can be a barrier to achieving your saving goals.
Credit cards and personal loans can often have very high interest rates. Don’t get lured into this trap. Remember, it’s always better to spend money you actually have in the bank.
SHARE THE LOAD
There’s no doubt that saving for a home with two incomes is easier than one. This will allow you to get into the housing market sooner, as well as having less financial stress when managing your home loan.
DON’T BITE OFF MORE THAN YOU CAN CHEW
Don’t assume just because you qualify for a home loan that you can afford it. Go back to your plan and work out exactly how much you can afford to pay towards a home loan each week or month. Ensure that you will be able to pay your mortgage, as well as being able to do special things every now and then, like going on a holiday.