Buying a home is the great Australian dream. But how do you manage to save for a deposit in today’s economic climate? Most banks require a significant deposit and the reality is that the bigger your deposit, the smaller your debt. You will need to make a savings plan and stick to it. Saving requires discipline.
An important part of saving for a home is determining how much you will be spending on your property. Obviously the smaller the purchase price the smaller the deposit. New homes are surprisingly inexpensive. Check out Coral Homes Australia and see what you can get for your money. You might also visit property auctions in the areas you are interested in. Keeping any eye on the real estate’s classifieds is another good way of getting in touch with house prices.
Here are a few tips to help you save for a deposit.
What Can You Afford?
It is important to determine what you can afford, how much you can repay each week. Then, work backwards from there and work out how much you can afford to borrow. Too many Australians have over-committed to large mortgages and have been forced into a fire sale.
Make a Savings Plan
Savings do not happen without planning. Work out how much you need to save, say 20% of the total house price, and start saving.
You will need to cut down spending that is not essential. Start by writing down what you spend your money on. Keep a record for a whole month. At the end of the month you can work out what is essential spending, like rent, food and electricity. You can also work out expenses you can avoid, tickets to the movies, eating out and buying the latest joggers.Remember to budget in a few treats; a budget that is too strict often results in an impulse blow out.
One of the biggest impediments to your saving for a deposit is that you have to pay rent. If you didn’t have to pay rent saving would be easy. Consider moving back into your family home. While this may not be all that appealing, it will help you reach your end goal of having your own home. Sometimes sacrifices are worth making. It will certainly speed up your savings plan.
Make Money from your Savings
As you save money you may wish to invest it to create even more money. Savings accounts generally produce very low returns. You might consider a term deposit or a special home saver account. If your plan is long term, like five years from now, then investing in shares is also an option well worth considering. Making your money work for you makes good financial sense; however don’t be tempted into get rich quick schemes as these are usually high risk.
Buying a home is one of the most important things you will ever do and the long term rewards will be incredible.
Image via coralhomes.com.au