If you’re looking to buy a house using a home loan, you’ll need an initial deposit to secure the loan. This deposit is determined as a percentage of the total loan, generally being anywhere upwards of 5%; however it’s worth noting that if your deposit is less than 20% of the loan (the recommended amount), you’ll need to pay additional fees in the form of lenders mortgage insurance.
That’s why Canstar has compiled the following list of the top 10 ways you can save for a house deposit:
- Have a second source of income
- Move back in with your parents
- Make a budget and stick to it
- Save more to begin with
- Sell some valuables
- Find a better bank account
- Deal with your debt
- Look for the bargains
- Ditch the plastic
- Downgrade your transport
10 Home Deposit Savings Accelerators
1. A second source of income
These days, there are many ways people could go about making a little bit of extra cash on the side. The internet has become a hotbed for “side hustles”, with countless opportunities to freelance as a blogger, graphic designer, copywriter, website developer, photographer…the list goes on. The “services” section of online classifieds can be used to advertise your skills or trades for hire. Also the rise of the sharing economy (think Airbnb and Uber) has meant that just about anyone can turn their homes into holiday accommodation or their cars into taxis.
Of course, you can still do things the old-fashioned way by offering gardening, cleaning, babysitting, tutoring, car-washing or dog-walking services around the neighbourhood. A simple weekend job in a shop or cafe is also an option.
Other side gig ideas include:
- mystery shopping
- fitness instructing
- party entertainment (e.g if you can play an instrument or fancy yourself as a comedian)
- participating in research studies
- data entry
- survey taking.
2. Moving back in with your parents
If you’re still relatively young, you might consider moving back in with your parents for a year or so. You’d pay less in rent and bills, and living with your parents may make it easier to utilise some of the other methods on this list.
3. Living life less glamorously
Cutting down on most or even all of your non-necessary spending could reap you serious savings if you’re diligent about it. Going out with mates, your morning coffee, your pay TV subscription; it’s worth weighing up their importance vs. how much you want to be a homeowner.
Making a budget can be difficult however, but luckily Canstar has written a few articles over the years to give you some help on making and sticking to a budget.
4. Save more to begin with
You might save say, 30% of each paycheck to a savings account. If you can, what’s to stop you adding another 10 or even 20% to your weekly or fortnightly savings? Even if you only add 5%, that’ll add up to a decent figure over a year or so.
5. Sell some valuables
If you’ve got items of at least moderate worth lying around, you could think about selling off one or more of them. Depending on what and how much you sell, you could end up with a sizeable lump sum to add to your savings.
6. Maximise what you’ve got
While it’s important to increase and add to your savings, it’s also important to make sure that your savings are in an optimal place. Find a savings account that can offer you an account with a high interest rate and minimal or no fees. This will ensure that you tap the full potential of your savings.
While it won’t directly contribute to your savings, it’s important to figure out how to minimise your debt so that you can save more ASAP. If you have multiple debts, try and consolidate them into one to save on interest and fees. If you can’t roll your debts into one, be sure to start with the debt with the highest interest, and work your way from there.
8. Take advantage of bargains
When you go grocery-shopping, try looking for cheaper alternatives if you?re used to buying name-brand products. Buy in bulk if you can, and avoid any ‘luxury products’ you might be tempted to buy. Stick to the basics, and see if you can’t save money on the basics.
The same goes for appliances and whitegoods for your house. Luckily, Canstar Blue has many comprehensive guides on where to find bargains on items such as these (and many more).
9. Ditch the plastic
Credit cards can be a serious thorn in your side if you’re trying to increase savings. They can encourage unnecessary spending, and if you don’t pay them off in time, they can hit you hard on interest. If you can’t get rid of your credit card(s), at least be sure to pay them off within the interest period. At least then you’re not paying anything extra due to interest.
10. Downgrade your wheels
It may seem drastic, but if you have a car you could think about either selling it in favour of a cheaper vehicle, or even just selling it outright and resigning yourself to public transport for the foreseeable future. Depending on the value of your car, this could cut the time needed to save your deposit significantly.
Work hard to make that dream home a reality
If you’re diligent with your savings plan and make use of one or more of the above tips, you might just manage to have the amount needed for a home deposit much faster than you thought possible.
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