It’s one of the most memorable and important periods of your life, but buying a property doesn’t come easily. For many, saving up for a housing deposit can be an extremely tall order. When you’ve got to take multiple costs such as stamp duty, valuation fees, insurance, inspections into account, pulling together the money for the deposit is just the start.
Property prices are soaring across Australia’s capital cities, so it’s not surprising that it can take a significant amount of time to save up for a housing deposit. One study even found that the average amount of time spent by first-time buyers saving for a housing deposit is 5 years. Many who’ve bought properties before in the past also spend on average 3.5 years saving up for a downpayment on a new property.
It’s not all bad news, though. In this article, we’re going to take you through the most efficient way for you to save up for a housing deposit.
Lay out a sensible saving strategy
In order to work out your savings strategy, you first need to spend some time figuring out the exact amount you need to save. For the majority of property loans in Australia, you’re going to need to put down at least 20% of the total property cost, if you don’t want to have to pay lender’s mortgage insurance on top.
This means that if you’re looking to buy a property worth $450,000, you’re going to have to put down at least $90,000. That’s far from easy for most people. There are, however, a couple of tricks up the sleeve. For example, if you can arrange a co-borrowing agreement with your parents or significant other, you might be able to pass-off some of the deposit costs to them.
Register for a high-interest savings account
Any of the funds that you put to one side for your deposit are going to waste if they’re not in an account with high interest. Having said that, any money that you make or save and choose to invest should be done with the utmost care.
Discuss your personal financial situation with a financial advisor and they’ll be able to guide you towards an investment that’s right for you. Alternatively, some banks are offering interest accounts at over 3%, so it could be worth playing it safe and going with someone you know.
Save money wherever you can
The term ‘lazy tax’ is tossed around to describe people who become complacent with their current services and don’t check the market to see if they can be saving money. You’d be surprised that price comparison websites for items like utility bills, phone contracts (and even mortgages) can actually save you thousands of dollars each year.
Research the other options on the market and put the time and energy into switching accounts – it’ll pay off in the long-run.
Make sacrifices in your personal life
Although saving for a housing deposit takes a good amount of time, you’re not going to get very far unless you make some adjustments in your personal life, too.
If you want to pull that deposit together as quickly as possible, you need to make the tough cutbacks on weekend trips, takeaways and impulse purchases.