How to Save for a House Deposit in 2021 - Saving Tips
How to Save for a House Deposit in 2021
After a turbulent 2020 and a torturously long lockdown, many of us are ready to ditch the renting and sharehouse lifestyle for good. If you find yourself looking ahead to make your first (or fourth) house purchase in 2021, stay tuned for some tips to kickstart your saving journey.
We’ll breakdown how you can save for a house deposit in 2021 and finally make that dream home a reality.
How Much Should You Save?
Firstly, it’s good to know what figure you should be shooting for when you start banking those dollars. The golden rule is to aim for at least 20% of the property value. While some lenders may accept smaller deposits, this can come with additional costs (such as Lenders’ Mortgage Insurance or Low Deposit Premiums).
Plus, it goes without saying that the more you save for a house deposit in 2021, the less you’ll need to borrow. Which means the less interest you’ll need to pay on those hefty loans.
Where To Start
Budget
Laying out a solid, but reasonable budget is the foundation of a good savings plan. It’s time to start living frugally and putting your purchases under the microscope – remember what the goal is in the long run.
Cut down on non-essential purchases such as dining out, retail and entertainment, where possible. Including a bit of wiggle room is a good idea when budgeting. This way your savings journey is less likely to be thrown off course by an unexpected cost or financial emergency.
High Interest Savings Account
Set yourself up with a high interest savings account to start accruing those extra sums early on. It’s best to make this account as untouchable as possible so you can’t be tempted to crack into it on an impulse.
Implementing an auto-transfer to your savings account as soon as you receive your paycheck is an effective way of automating your saving habits.
Saving Tips
Check Your Eligibility For Loans and Grants
If you’re looking to purchase your first home, you may be eligible for the First Home Owner’s Grant. It differs from state to state but is a once off payment made to your lender at the time of settlement.
Another scheme you may consider is the First Home Super Saver (FHSS). Through this you may be able to make additional contributions to your super which can later be withdrawn and used for a deposit.
Take Care Of Your Debt
Trust us on this one – saving for a deposit is much more efficient when you aren’t trying to juggle multiple other debts at once. As frustrating as it may seem to put your house savings on the back burner for a little while, it’ll save you time and stress in the long run.
Plus, lenders will be more likely to approve your home loan application if you have fewer outstanding debts.
Got a savings scheme together and looking for the right lender to suit your needs? Our experts are here to guide you through the process. Contact us or head online to use our handy