Getting a foot in the door of the property market can be challenging, especially when it comes to saving for that all-important deposit in a city like Sydney where property prices and living expenses are high.
The key to saving for a deposit involves establishing a plan, embracing a budget and curbing unnecessary spending, and don’t forget there are financial incentives for those looking to buy their first home. Here are the top tips for saving for a deposit.
Set a goal
Depending on your financial situation, most lending institutions require a deposit of between 10 and 20 per cent of a property purchase price. For a $500,000 house that means buyers need to have between $50,000 and $100,000 in the bank, and also require a solid savings history for their financial institution to consider a loan.
So before you consider buying, factor in property prices in the suburbs you like and set the goal you’re looking to achieve. Then it comes down to savings, and here are our top tips…
Find the change
Even if you’re on a tight budget, there’s always money to be saved somewhere, it’s just a matter of finding it.
Take note of your weekly expenses, keeping careful track of where all your money goes, when.
Only when you know where your money goes each week, will you know where savings can be made.
Whether it’s takeaway, or too many texts on the wrong phone plan, find the non-essential items that cost you and eliminate unnecessary expenditure.
Cut up the credit card
Owning your own home is worth a little sacrifice in the big picture of life. Once you know your expenditure look at the big leaks in your financial bucket like high interest credit cards that tempt you to spend.
Credit cards are the primary offenders when it comes to spending unnecessary cash on interest and bank charges. Where possible don’t use your credit card – it’s not your money. And if you have to use it be sure to pay it off by the due date.
Also consider a debit card rather than a credit card. This allows you access to tools such a Visa or Mastercard, but without the bank benefitting from your over-expenditure.
Pay bills promptly
Paying promptly applies to all bills. Instead of reacting, be proactive about how much you are likely to spend on fixtures such a phone and electricity charges each month and set money aside in advance to avoid those useless late fees.
With something as simple as a meal planner you can shave hundreds off your weekly bills. Take the time to plan out what you will eat, when, and factor in how leftovers might be used for lunches or subsequent meals.
Do this with specials or seasonal produce in mind and you’re well ahead of the grocery spending game.
Use your tax return
If you have a Christmas bonus coming or a tax return in the pipeline, use it to boost your savings rather than tempting you into spending. Chances are this is extra money you weren’t expecting, so won’t even miss if you funnel it into an account that accumulates for a greater cause.
Seek financial advice
Financial advisors and your bank are available to offer tips and tricks when it comes to meeting a savings goals and a little knowledge can go a long way when saving for a deposit. For example, high interest savings accounts make your money work a little harder along with other investment strategies that can get you where you want to be in a shorter amount of time.
Even small changes like paying out a credit card using a personal loan can help you eliminate debt and the wasted expense of high interest credit.
Use the incentives
Both the NSW and Federal Governments offer a host of incentives for home buyers looking to purchase their first home. You can learn more about these here, but suffice to say grants, discounts, waived charges and even access to superannuation are available to help you boost your deposit and eliminate charges like stamp duty.
About United Strata
Specialising in the Macarthur region, United Strata offers professional yet personalised service for buyers, sellers, landlords and tenants alike.