Tips to help you save for a home deposit, if that’s one of your goals.
You may know I’m a big believer in having the full 20% deposit, even though many people argue that just getting into the market is more important, I don’t agree.
Home ownership is a long-term commitment I’m talking 25-30 years, so waiting until you have a really good deposit is more important to me, than over committing and ending up feeling financially stretched.
Given today’s property prices, 20% may feel like a stretch, but it is achievable and I’ve got some tips to get you started.
Online savings account
The first one is to set up an online savings account, that has high interest, but is not attached to your usual bank accounts.
This will make it one step harder to access your savings, and will reduce the temptation to dip into it when you want something really bad.
Let’s face it, this is always going to happen, so the more distance you can put between your shopping trips and your savings accounts the better.
First Home Saver Accounts
It’s also worth mentioning First Home Saver Accounts, this is another example of FREE MONEY (which I love), as the government will contribute 17% of your annual contributions for up to 4 years. This is a topic unto itself, but certainly worth doing a little research on.
Staying focused is critical to savings success, or reaching any goal for that matter. Create a little vision board, or put a photo of your dream home somewhere that you’ll look at every day.
With it, write the dollar figure you are trying to achieve as a deposit. They say that goals written down and looked at daily, are 99% likely to come to fruition. That’s good enough for me.
Next, get into a solid savings habit by putting away, each month, at the very least the difference between what your future mortgage repayments will be, and your current rent.
That way you’ll be very used to putting aside that level of money regularly that mortgage repayments won’t be a huge shock once you finally your home.
Not until you’re ready…
Lastly, don’t start looking for a property, until you are really ready. The main reason for this, is that property generally becomes a very emotional purchase.
If you start looking at property before you’ve saved up the deposit you want, you’ll end up getting tempted to buy something before you’re really ready. It happens all the time.