Buying a home is a big goal for many renters across Australia. But it’s one that not enough people get to achieve. One of the biggest reasons many renters get stuck in the rental cycle is not being able to save a deposit. It can be hard to try save the huge 20% deposit most banks and lenders ask for. Which is why Darren Walters and the No1 Team put together this guide on how to save for a house deposit.
Of course, thanks to No1 Property Guide, not having a deposit doesn’t mean you can’t achieve your homeownership dreams. Darren’s no or low deposit new home system is designed to help renters get out of the rental nightmare. Without needing the large deposit big banks and lenders usually demand. In fact, a deposit isn’t as important as you might think! Fill in our pre-qualification form to find out how you can buy your new home with low or no deposit.
But, if you’re determined to save that deposit before trying to get into the property market, keep on reading. We’ve broken down our top tips for saving a deposit so you can start saving today.
Set Your Goal for Saving a House Deposit
Your first step is knowing how much you want or need to save, and how quickly. Setting a realistic goal is important. If your savings goal is simply impossible you’ll quickly lose sight and may even end up going backwards.
Sit down and go over what size deposit you’re looking at. The most common deposit goal is a 20% deposit. So, on a $500,000 loan, that’s $100,000 saved. Of course, how much you need to save will also change based on how much you may already have. If you’ve got $20,000 in your bank already, you’d only need to save $80,000 to hit your goal.
Once you know how much you need to save, you’ll need to decide on a time frame.
This is where the real decisions come into play. As you’ll need to pick a time frame that’s reasonable for your budget. But also quick enough to not miss out on your dream of owning a home as well.
Then, once you’ve set your goal, it’s time to start saving.
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Knowing how much you can save in a short period is crucial. You need to know whether you can out save the capital growth in your area. Historically, property prices tend to double every 10-15 years here in Australia. And with covid pushing capital growth and land scarcity out of control over the last couple of years. It’s vital you know you can actually save enough to not only cover the capital growth but also act as a deposit.
Darren has seen hundreds of renters miss out on their opportunity to enter the market because they struggled to save a deposit. Which is why he created his no or low deposit new home system. Using his unique system, he has helped thousands of renters escape the rental nightmare once and for all. The first step is easy. Simply fill in our simple pre-qualification form and one of our New Home Consultants will be in touch to discuss your factual new home options.
Break Down Your Spending Habits
Cut Back Your Spending
Once you’ve set your goals, your next step will be to break down your spending habits to find ways to cut back and put more towards your deposit. It can be surprising just how many small costs you can build up over time. Gyms, Netflix, subscriptions, regular coffees, at the end of the week it can all add up.
Sit down and go over all your expenditures, big and small, and work out what ones you can go without. Whether it’s cutting back on your 2nd morning coffee, cancelling your extra streaming service, or even just spending less on groceries. Small changes can make a big impact on your savings plan.
Cutting back on your credit cards, entertainment and takeout costs is another simple, but effective method to increase your savings quickly.
Move Back Home to Help Save a House Deposit
If you’ve got the option, moving back home is another way to save a lot of money. Rent is one of the single largest bills most renters will have. And if you combine it with other bills like your electricity, phone, water or internet, the expenses can really add up.
Moving back home and paying either no rent or much less, will help boost how much you can put away each week. Reducing how long you need to stay renting and pushing you towards owning your own home even sooner.
Freelance or Get a Second Income
This one may not be possible for everyone. But if you can, getting a second job, or doing some freelance work is a fantastic way to increase your income and savings. This is particularly helpful if you can’t cut back on any expenditures or are still paying rent while you save.
What if I Can’t Outsave Capital Growth?
Saving a deposit is a great goal, and it can definitely help to reduce your loan to value ratio (LVR) which is how lenders mortgage insurance (LMI) is calculated. But depending on how much you can save and where you’re looking to buy. It can be basically impossible to save enough to cover capital growth and to have a deposit.
If a property is worth $500,000 in 2021, then your 20% deposit is $100,000. But if the property grows to $600,000 over the next 12 months, suddenly your 20% deposit grows to $120,000. Now not only do you need to be saving enough to meet your original goal, you actually need to find another $20,000 just so you don’t fall behind!
It’s something Darren has seen a lot over his 20+ years in the industry. Which is why he created his no or low deposit new home system. And, if you’re worried about having to high of an LVR and being stuck paying LMI, don’t be!
LMI can often sound like a terrible cost to need to pay. But at the end of the day, would you rather pay $10,000 extra over the life of your mortgage? Or miss out on your opportunity to get into your own home altogether?
Get into the Market With No or Low Deposit
Struggling on how to save for a house deposit while juggling rent, bills, and the kids? Then get in touch with the New Home Consultants at No1 Property Guide. We specialise in helping renters escape the rental nightmare, without needing the 20% deposit most lenders require.
Simply fill in our pre-qualification form and one of our New Home Consultants will be in touch to discuss your factual new home options and how we can help you achieve your homeownership dreams.