With the increasing cost of everyday living, saving for a home deposit can often feel like an overwhelming task.
It’s important to know that the sooner you start saving, the sooner you will have a deposit. So, there’s no better time to start saving than right now.
Here are some of the best ways to increase your home deposit to ensure that you’re moving into your home sooner, rather than later:
Work Out How Much You Need To Save
It’s incredibly important to start with a goal, and work towards it. Once you know what your borrowing capacity is, you will be able to identify the approximate amount that you require for a deposit.
Generally, most lenders require a 20% deposit. But, don’t let this deter you if a 20% deposit feels out of reach. Applying for Lenders Mortgage Insurance (LMI) can get you into your home sooner should you wish to save less than the 20% required.
Once you know the approximate amount of what you need to save, you can then put strategies in place to improve your savings.
Knowledge is power; so don’t be afraid to ask potential lenders for their best rates, including the best accounts and loan types that fit your home buying goals and budget. The more information you have, the better.
High Interest Savings Accounts
Many banks offer their customers a high interest savings account. This type of account is a great tool to utilise when saving for a house deposit.
High interest savings accounts allow you to deposit a certain amount of money every month, and reward you with a higher interest rate if you meet the minimum deposit amount.
Quite often, if you withdraw money from the account the interest accumulated is reduced for that month. Because of this, it is important that you read the Terms and Conditions of the account to ensure that you are depositing the minimum amount required to utilise the higher interest rate.
As always, it is important to research the accounts that are available to you, and make a decision based on your current circumstances. However, high interest savings accounts reward you for saving more money, which is a really great incentive to get you closer to your deposit goal.
Create A Budget
Creating a budget is one of the best ways to ensure that you will reach your deposit goals faster.
There are many online tools that are useful, including those that are provided on lender websites. These tools can help you to focus on improving your savings in the most convenient ways possible.
Another great tool to utilise is Microsoft Excel. Microsoft Excel allows you to create a personalised spreadsheet that is unique to your circumstances. The best thing about this is that you can outline your expenses, as well as monitor your incomings and outgoings, allowing you to stay on track and eliminate any unnecessary spending when you see fit.
This is a great way to take control of your finances, and is a really great tool to continue to use even after you’ve reached your deposit saving goal.
Spend Less= Save More
Once you have established a budget, you will be well aware of where your money is going, and why.
Use this information to guide your future purchases. Realistically, the less you spend the more you save. So if you can cut costs, now is the time to do so.
General expenses, including utilities and food, are a great way to cut costs. You can do this by calling your providers and making sure that you are getting the best deal available to you. If you aren’t, feel free to look elsewhere. Quite often, your provider will happily oblige.
Taking the time to shop for the best prices can be highly rewarding. So never underestimate the power of an Aldi shop, or trip to the local grocery store to buy in bulk.
It’s often the smaller things that make the big difference when saving for a deposit. Don’t be afraid to make changes and adapt so that you can be in your brand new home sooner than you expected.