Purchasing a home is an exciting prospect for young adults, and while the media is fast to instil fear in first home buyers, now could be the time for Millennials to consider buying. While the average mortgage size is still relatively high, house prices in Australia are forecast to stabilise over the next few years.
Declining property values in Melbourne and Sydney, combined with the slowing market, means Millennials should dust off the piggy bank and begin the big save.
Such a large investment calls for additional saving tactics that stretch beyond the basic methods. Wondering what is the best way to save up for a house? We’ve got the latest list of hot tips on how to save for a house deposit.
How much money should I save for a down payment?
Generally, you will need at least 5% of the purchase price in order to take out a loan. Therefore, if you’re looking to buy a property selling at $400,000, you’ll need at least $20,000.
Do an assessment of the area you’d ideally like to buy in and you should be able to establish a relatively accurate savings goal.
How to save for a house deposit
Reassess your current living situation
How much rent are you currently paying? Could this figure be decreased without any major sacrifices?
If you’re currently living alone, you could consider moving into a share house to cut the cost of your rent. Other factors including the area and the age of the property could also be dictating the price you pay
Review the current rental market in your local area and consider making a short term, money-saving move that could assist with your your long term saving goals.
The first home super saver scheme (FHSS)
The FHSS was introduced by the Government to ease the strain on housing affordability in Australia. The scheme will allow you to save money for your first home inside your superannuation fund. You can make voluntary contributions of up to $15,000 per annum to your super fund, which can be released only after meeting certain eligibility requirements. If you’re guilty of dipping into your savings for impulse purchases or weekend getaways, this scheme could be an extremely helpful tool. Find more information about the FHSS and eligibility here.
Open a high interest savings account
Be rewarded for your savings with a high-interest savings account. You can still be granted access to this account (unlike a term deposit or the FHSS), however, it will earn higher interest than your regular everyday account. Research banks in your area to find the highest interest rates and the best deals. Watching your money multiply on its own will encourage you to contribute more to your savings account!
Monitor your spending
It feels like every day it gets easier to pay for our purchases with services like ppayWave andMobilePay readily available in most stores. Not to mention our App Store purchases that can be made with the simple tap of a finger. With so many payment options, direct debits and credit cards, it’s no surprise our spending can get out of hand very quickly. Track your spending, monitor your direct debits (gym memberships, phone bills etc.) and set an achievable weekly spending limit. Your saving efforts will be more successful long term if your goals are realistic.
If it’s time to get serious about saving for a house, adopt some, or all of these methods to set you on the right track. If you have additional questions on how to save for a house deposit, or you’d like to learn more about the home loan process, contact the expert team at Mortgage Domayne today. We can guide you every step of the way and will help you find the lowest mortgage interest rates.