Buying a house could be one of the most significant investments to be made in a lifetime. If you are considering entering the property market, the main focus could be collecting a healthy amount as savings for the down payment.
Besides the down payment or deposit required to buy property for sale in Bannockburn, there are other potential costs related to the purchase, like moving expenses, conveyance fees, and unpredictable costs.
Saving for a deposit can be a challenging task. As per recent research, the average time for saving for a house deposit is over five years in Canberra, over seven years in Melbourne and eight years in Sydney. Australians must save $106,743 on average for a 20% deposit for securing a mortgage.
Though such figures seem intimidating, practical strategies can be used to save up for a deposit. Following are some of the tried and tested tips for building up savings for the down payment or deposit for a new house:
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Work out goals
To determine how much you will require to save for a house deposit, it is vital to understand how much you can potentially borrow. An online home deposit calculator is always helpful in estimating the amount of loans and monthly repayments.
After estimating the home loan amount, it is possible to calculate the deposit. The best loan deposit is typically 20% of the price of the home. Significant deposits enhance the opportunity for approval of loans by proving to lenders that you can reasonably manage your finances. Note that hidden costs like duties and fees must be factored into the total budget. Putting a 20% home deposit down also helps avoid paying for Lender’s Mortgage Insurance.
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Make a budget
This might be an obvious factor, but setting a budget and sticking to it is vital for saving for a home deposit. After monitoring transactions, measure expenses against income to work out the limit for spending.
Allocate money for fixed expenses (utilities/rent) and for unexpected expenses (repairs of cars), which will help to estimate how much leftover money can be afforded to save up for a home deposit. Though it is good to be frugal, it is essential to be able to afford an occasional treat.
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Track your expenses
When monthly expenses are monitored, you will get an idea about how your money is going and offer some ideas about chances to lower spending and save cash. This can be done in the traditional pen and paper or the modern budgeting spreadsheet. There are also many budgeting apps in the online medium.
Over time, you will find areas where there are wasteful or excessive expenses like takeaway foods, grocery bills or entertainment subscriptions where costs can be cut.
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Cut unnecessary expenses
Setting a budget will reveal where to cut expenses to save money. However, if the budget is tight, savings become hard when the house's purchase price and other hidden costs are factored in. There are many ways to save money, like cutting entertainment costs or fancy dinners. Also, ensure paying bills on time to reduce penalty costs.
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Find attractive savings schemes
Where you put in savings amount counts as it impacts how fast the savings grow. So, finding a savings account that provides a high-interest rate and charges minimal fees is worthwhile. Also, consider enabling an automatic, regular transfer from a daily account into a separate savings account meant exclusively for a home deposit. Such savings schemes help to invest in property for sale in Inverleigh.
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Do a side hustle
The modern economy favours a side hustle. This can range anything from pet sitting to food delivery to using artistic skills or photography skills. Thus, there are many ways to earn a side income.
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Move in with friends or family
Because of Australia's high inflation rates, the rent cost can burgeon. If you are attempting to save up for a home, and there are friends and family who are welcoming, consider living with the latter for a brief time. Living with roommates is an easy way to split bills and save money.
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Sell unwanted items
If some unused or unwanted items are lying around the home, consider selling these online for some spare cash. Items like unused furniture or appliances, video games and toys are ideal candidates. In case there are many items, consider holding a garage sale.
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Get debt under control
If you are paying a hefty sum as interest payments for existing debts (car loan/credit card), paying this fast implies that you will pay less for interest in the future, leaving more money for saving for the deposit. But avoid this for loans that carry fees for early repayment. In case of multiple debts, it pays to consolidate the debts into one, which makes repayments easier and helps reduce fees.
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Government assistance
The Australian government offers various grants to save money for a home sooner. These include the FHBG (The First Home Guarantee) scheme, FHSS (First Home Super Saver Scheme), First Home Owners Grants and Concessions and Family Home Guarantee.
In sum, saving for a home deposit is one of the most challenging financial goals for property buyers. However, using the above tips, you can save for a home deposit and enjoy peace of mind.
