“Buying a house is exciting and life-changing. What's not as much fun is saving for the deposit. But the more money you put down upfront, the less you'll have to borrow. There are many ways to save for a home that don't require major changes to your lifestyle. With a good savings plan and some discipline, you'll soon have the deposit for your home,” the Australian Securities and Investments Commission (ASIC) advised on its financial literacy website, Money Smart.
According to ASIC, the first step in saving for a home is working out how much you can afford to spend for your first home. “Be realistic. You may need to consider a smaller property, an older property, or a property in a different area, just to get you started in the property market,” ASIC emphasized.
Further, saving involves checking out prices on the property market to give you an idea of prices in the areas in which you want to buy. Read the papers, go to auctions, or check out websites to bone up on your knowledge of current property prices.
To build your home deposit fund faster, ASIC gives the following tips:
Cut back on extras. “The easiest way to see where you can cut back is by doing a budget. Write down your essential costs, such as rent, bills and food, and subtract this amount from your income. What is left over is what you could potentially save for your deposit.”
Move back into the family home. Rent takes up a huge chunk of your income and saving on it could hasten the growth of your fund for your new house.
Put your savings into high-interest products. Study your investment options, but be wary of products that promise unrealistically high interest because they may come with high risk as well.
“Buying a home is a big step and it's easy to be daunted by the large sums of money involved. With careful budgeting, saving money towards your own home is made much easier,” ASIC concluded.