Chris Childs


Smart Ways to Save for a House Deposit

Purchasing a property is a big task, and one that can often feel overwhelmingly out of reach. If you’re considering entering the property market, it helps to brush up on your industry knowledge and make the most of professional assistance.

Before taking the plunge, read our simple guide for entering the property market and start crafting a savings plan that actually works.Work out how much you can afford to borrowFirst things first: make an honest and realistic assessment of what you can afford to safely repay over the length of your mortgage. Herein, you can either employ the services of a professional to determine the amount of your home loan, or find an online mortgage calculator to generate a figure for you. Once you’ve established this figure, you can then work out how much you can afford to spend on a property by using the following calculations:Home loan + deposit saved – fees and charges = amount you can spend on a propertyConsider whether you will be charged Lenders Mortgage Insurance (LMI)This essentially comes down to the amount of your home loan: if you intend to borrow more than 80% of the property’s overall value, you will most likely be charged Lenders Mortgage Insurance. There’s no fixed fee here, and the cost will vary depending on the amount of your home loan and the percentage of the property value you borrow.Prepare a monthly budgetNow that you know just how much you can afford to spend on a property, you can draw up a monthly budget to help you reach your goals within your desired timeframe. Find ways to help you stick to your budget – for instance, take advantage of local deals by downloading an app such as Groupon, bundle all your insurance with one insurer, and avoid impulse buys.Open a separate savings accountCreate a high-savings bank account to be solely used for your home deposit, and set up an automatic transfer for every pay day. If you’ve managed to diligently stick to your budget and find that you have a surplus amount left in your regular account at the end of the month, switch it over to your savings account.Pay off your credit cardsClearing all debt you may have – whether in the form of credit cards, personal loans or hire purchase agreements – will help increase your borrowing power.Record your expenditures Take the time to record your expenditures for an entire month, then at the end, analyse your behaviour to find opportunities where you can make further savings. This means writing everything down – even those seemingly trivial, miscellaneous items. Something as small as two takeaway coffees a day can add up to $200 a month!Don’t forget about those extra costsBefore purchasing a property, it’s important to acknowledge all those extra costs everyone tends to forget about. These include:
  • Building inspection fees
  • Pest inspection fees
  • Solicitor/conveyancer fees
  • Stamp duty
  • Loan application fees
  • Moving costs (e.g. furniture removalists and cleaning services)