- Personal Finance
5 Easy Steps to Saving a Deposit for First Home Buyers
Saving a deposit or down payment for first home buyers may seem as far away as a trip to the moon. For many young couples covering the cost of a recent wedding and setting up a home will have taken any savings they may have accumulated. Making a commitment is the first step to fulfilling the dream of buying your own home. Saving the deposit will take some careful planning, research and serious dedication to honouring your household budget.
Saving a Deposit for a House Takes Commitment
Set a Timeline
1. Make the Commitment
For some potential first home buyers the biggest hurdle will be in making the initial commitment. Talking about your dreams won’t make them happen. Getting a pen and writing them down will bring them one step closer. Setting an achievable time line will keep the goal alive.
- Commit to a plan
- Set a time line
2. Establish a Good Credit Rating
Saving a deposit for a house won’t help much if you are up to your neck in debt when it comes time to ask the bank for a mortgage. “Please sir, I know I already owe $30,000 but can I have $300,000 more?” Clear as many existing debts as you can, especially those that have been around for a while and are costing you more in interest than the initial purchase.
Paying new bills regularly and before they fall due will set the scene for an improved credit rating. Start saving a little of your weekly income to show the banks you are serious.
- Clear debts
- Pay bills regularly
- Develop a savings’ record
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While you are waiting for those savings to grow you can be actively seeking out answers to a number of questions that will arise. Find out how much you can borrow based on your current earnings, age and repaying capabilities. There may be a grant available for first home buyers that can be added to the deposit you are trying to save.
Once you have a figure in mind for the potential mortgage, calculate the actual deposit amount you will need to have and research the buying expenses that come with purchasing a home.
- Find out how much you can borrow
- Research First Home Buyers Grant
- Calculate your deposit and buying expenses
4. Revise your Personal Financial Situation
Review and revise your personal financial situation regularly to keep on track with your savings. As painful as it sounds, making a budget makes sense. If you know what bills are coming up and have put these amounts aside, you will have a greater chance of developing your credit rating. Income need not be a fixed amount if you can find a part time job and add to your earnings your savings will grow that much quicker.
The biggest downfall in saving a deposit is the amount you are spending on unnecessary items. Cut down on those impulse or spontaneous purchases and you may be surprised at the increase in your savings over the course of time.
- Make a budget
- Increase your income
- Decrease impulse and spontaneous buying
5. Open a high interest bank account
Perhaps the first step should be to open a high interest bank account so you can get full advantage of a return from the very beginning. Depositing your money in your normal every day account is equal to stashing it under the mattress. Without the additional interest you could be earning, saving for a deposit is going to take a long time. Have your agreed weekly savings amount deducted from your pay to take full advantage of a weekly interest being added to your savings and you'll be earning interest on your interest.
- High interest bank account
- Pay deductions for savings
Saving a deposit for first home buyers can be closer than you ever imagined. Once you have a plan and make a commitment, the rest is up to how keen you are to make that first purchase. The dream of owning a nice little house in the suburbs is, as close as you are prepared to strive for saving that initial deposit. Happy house hunting!
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