Savings Tips For Your First Home Deposit
Thinking of building your first home? Make sure you check out our savings tips.
Building your very first home is an exciting step in anyone’s life. Whether it’s the thrill of walking through display villages imagining your life in the home you’re in or flicking through a stack of floor plans and brochures trying to find the perfect home, the beginning of your building journey can be an exciting time! However, saving for your deposit might not be as fun. That’s why we’ve compiled a list of handy tips to help you save for your first home deposit.
If you’re wanting to save for a 10% deposit, calculate how much that will be. For example, if you’re wanting to purchase one of our house and land packages for $400,000, you will need a deposit of $40,000. Set that figure as your main savings goal, but make sure you create incremental savings goals (e.g. $10,000, $20,000 & $30,000) and reward yourself once you’ve reached those smaller goals too.
Alternatively, you can look into the new 2021-22 Federal Budget’s initiative called the First Home Loan Deposit Scheme. This is where you only need to come up with a 5% deposit for your home loan. And as of this year, an extra 10,000 places were made available from 1 July 2021 to 30 June 2022.
The second thing to note is that you may be eligible for the $15,000 Queensland First Home Owners Grant. Unfortunately due to several different reasons, it’s best not to count on using the grant as a deposit, however it can still be used to help you fill your brand new home with furniture and appliances.
Lastly, if you’re only able to save up a small deposit, you can always look into a guarantor loan. A guarantor on your mortgage is someone who is willing to provide additional security for your home loan. They usually tend to be either a parent, grandparent or sibling, and while they don’t need to provide any cash upfront, they offer up part of their own home equity to top up your cash deposit. This can help you move into your new home sooner, as well as avoid paying the cost of Lender’s Mortgage Insurance (LMI), which could total to thousands of dollars.
If you aren’t keeping track of your spendings, how can you know the amount you can save? Make a list of your expenses for an entire month. This list should include your repetitive expenses such as rent, bills and groceries, but also smaller things like haircuts, petrol, take out food and day trips to the cinema.
After you know how much you spend, you can then create a budget. You may find that you will need to make some sacrifices in order to effectively save up for a home loan deposit. Have a look at what you’re spending your money on and decide what you could give up. For example, that could mean you make a coffee at home or take lunch to work instead of buying it daily.
Do you still have a car loan or credit card debts? You may have found that the interest rates on these loans can make these more expensive than what you initially thought. We recommend paying off your loans or credit cards as soon as possible, so you can start saving at full speed. After you’ve paid off your credit cards, get rid of the temptation and only keep one (with a lower limit) for emergencies.
Your savings plan will help put your work into action! Find out how much money you have left over after your payday (spare income), and then out of your spare income, set up an automatic transaction that transfers a certain amount from your spare income to your savings account straight after each pay day. To find out how much money you have left over after your payday, consider what you make, then minus your expenses from your budget, as well as a bit of extra money for pop-up expenses.
Boost your savings account and give yourself a head start. Consider depositing your tax returns, cash gifts or bonuses immediately into your savings account rather than spending it on a new TV. You may also be able to earn some extra money on the side through a casual job like babysitting or delivering newspapers or even by selling some of your old items that you no longer need.
Saving for your first home deposit might mean you may need to step up your spending habits. If you’re the type of person to make impulse purchases, consider using shopping lists or only buying items that are on sale. For example, op-shopping can be a great way to buy stunning new outfits without breaking the bank, or meal planning can help you to not purchase extra snacks during your grocery shop or buying take out during the week.
Saving for your first home deposit might mean you will need to be more aware of your finances and perhaps make a couple of sacrifices, but once you’ve reached your goal, the reward of owning your own home is extremely satisfying. At Domaine Homes, we make building your first home faster, smarter and easier. From our range of affordable home designs to value for money house and land packages, we’re here to make your building journey as easily attainable as possible. Head to your nearest Domaine Homes display centre to chat to one of our friendly sales consultants about your options.