Top tips on saving for a house deposit

10 December, 2020
Posted By: Lal Gamage

With buyer sentiment at a high, many Australians are pondering whether now might be the time to take the next step in the property journey.

Recent data indicates around a third (39 per cent) of Australians have plans to buy a property in the next 12 months, but one of the first boxes they need to tick is that all-important deposit. So here are our top tips for saving for a house deposit, sooner rather than later.

More money in our pockets

Despite initial fears to the contrary, surveys indicate Australians are faring better financially in the wake of Covid-19 than expected.

In fact, a recent report by money.com.au found two out of three Australians have more cash in their hip pocket than they did last year courtesy of a combination of government stimulus, decreased expenditure, and increased saving.

Meanwhile, lending conditions look set to relax and interest rates are at an all-time low, with little likelihood of increasing in the immediate future.

All this bodes well when it comes to saving for a house deposit, but how can you ramp it up further?

Watch that discretionary expenditure

Discretionary expenditure is the type of money you spend on items that aren’t essential. It’s one of the key factors lenders look at when considering whether you can service a loan and is a great place to start when it comes to tightening the budget to save for a deposit.

The reality is even little cuts here and there can quickly add up. So, foregoing that daily takeaway coffee, for example, could save you over a $100 a month, while slashing your subscriptions, cutting your clothing spending, or reducing your dining out can also quickly make a difference.

Go after a better deal

While you can slash the non-essentials there are some items you can’t forgo such as electricity, insurance, telephone, gas, and rent.

While you may not be able to eliminate them, you can reduce them by going after a better deal using a comparison site or talking to your provider.

Meanwhile, a good rental history can actually stand you in good stead when it comes to applying for a loan.

Bank those lump sums

Whether it’s a Christmas bonus or a juicy tax return, lump sums can make all the difference when it comes to saving for a deposit. Where possible put these aside instantly in an account that you do not touch.

Grants available

If you’re a first home buyer, you may be eligible for a number of grants and incentives. This is especially the case if you’re looking to build or buy a new home.

Incentives include the First Home Loan Deposit Scheme, which allows you to buy a property with less of a deposit, and first home buyer grants which vary from state to state when it comes to conditions and value.

Budget

Finally, create and establish a budget then track your expenses. Keeping a record of what you need to spend when and then staying accountable to it helps you put more money aside.