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7 Savings Hacks to Help Home Buyers Save for a 20% Deposit
Discover 7 powerful savings hacks helping you save for a 20% deposit faster. Learn tips on budgeting, debt management, and first-time buyer government schemes.
Saving for a house deposit is one of the most significant financial milestones in life. For many prospective home buyers, the magic number is 20% of the property's value. If you've been wondering, "How much deposit do I need for a home loan?" or "How much do I need for a house deposit?"—you’re not alone. In this guide, we'll cover seven practical savings hacks to help you reach that 20% faster, while also exploring first home buyer schemes, budget tips, and more.
Guide to this Article
Set Your Budget and Define Your Savings Target
The first step towards saving a 20% deposit is setting a clear budget and defining how much you need to save. This means answering the key question, "How much deposit for a home loan do I really need?"
Understanding Your Home Loan Deposit Requirement
A standard deposit in many cases is 20% of the home’s purchase price. However, depending on the type of loan and your lender's requirements, the answer to "how much deposit do I need to buy a house" can vary. Some loans, like low deposit home loans, may require as little as 5%, while others offer no deposit home loans under specific conditions.
Setting Realistic Financial Goals
Once you know how much for a house deposit is required, it's crucial to set a target savings amount based on the property price you’re aiming for. If the home you’re eyeing is priced at $500,000, you'll need $100,000 to cover the 20% deposit. But even if you’re targeting a mortgage with no deposit, having some savings ready can reduce stress later on.
Audit Your Spending and Build a Smart Budget
When saving for a house deposit, every dollar counts. Conducting a thorough audit of your spending can uncover areas where you can cut back and save more effectively.Identify Non-Essential Spending
By categorising your monthly expenses, you’ll likely find non-essential items that can be reduced or eliminated. Think subscriptions, takeout meals, or excessive shopping. Redirecting this extra cash can boost your deposit savings quicker than you expect.
Create a Balanced Budget
Build a budget that factors in your essential costs, debt repayments, and a solid savings plan for your deposit. Be sure to revisit and adjust this budget regularly to stay on track. Check out our Budget Planner
Clear Other Debts Before Boosting Your Savings
Carrying high-interest debts like credit cards or personal loans can slow your deposit savings journey. Clearing these debts is essential before you commit fully to saving for a home deposit.Prioritise Debt Repayments
By focusing on paying off debts with high-interest rates, you free up extra money that can be redirected into your savings account. Once you've tackled your debt, saving for a deposit becomes much more manageable.
Avoid Taking On New Debts
It’s tempting to finance large purchases while saving for a house, but doing so can hinder your progress. Make a commitment to avoid new debt and focus on building your deposit instead.
Automate Your Savings for Stress-Free Growth
Automating your savings is one of the simplest and most effective ways to ensure consistent growth toward your deposit goal.Set Up Automated Transfers
Have a portion of your salary automatically transferred to a dedicated house deposit savings account each payday. This way, you won’t be tempted to spend the money elsewhere, and your deposit fund will grow steadily without you having to think about it.
Use a High-Interest Savings Account
Choose a high-interest savings account to maximise your deposit growth. The interest earned will provide an extra boost, helping you get closer to your goal faster.
Discover Transaction Round-Up Service
Many banks and financial apps offer round-up features, where they round up every purchase you make to the nearest dollar and transfer the difference to your savings account. This can be a subtle yet effective way to grow your house deposit without drastically changing your lifestyle.Round-Up Your Purchases Automatically
For instance, if you spend $4.50 on a coffee, the app rounds it up to $5.00, and the extra 50 cents is added to your savings. It might not sound like much at first, but over time, these small contributions can accumulate and make a noticeable difference.
Some bank accounts even have a Round-Up feature, which include; ING, Ubank, Suncorp and Commonwealth Bank. There are also third party providers such as Wisr which use Open Banking to round your transactions, at no cost to you.
Make Use of Spare Change
By rounding up all your transactions, you’re essentially saving spare change with each purchase. This hands-off approach helps you grow your deposit painlessly.
Explore Term Deposits or Investments to Accelerate Savings
If you’re looking to further accelerate your savings, you may want to explore more sophisticated financial options such as term deposits or low-risk investments.Benefits of Term Deposits
Term deposits offer a fixed interest rate for a set period, ensuring your deposit grows steadily over time. This is a safe and secure way to save while avoiding the temptation to withdraw the funds prematurely.
Consider Low-Risk Investments
For those with a higher risk tolerance, exploring low-risk investment options can yield better returns than a standard savings account. However, it’s important to consult a financial advisor to ensure the investments align with your timeline and goals.
Unlock Savings with First Home Buyer Government Schemes
One of the best ways to save for a deposit is by leveraging government schemes designed for first-time buyers. These programs can be game-changers, especially if you're struggling with how much deposit you need for a house deposit.First Home Loan Deposit Scheme (FHLDS)
The FHLDS allows eligible first-time buyers to purchase a home with as little as a 5% deposit without paying Lenders Mortgage Insurance (LMI). This significantly lowers the total amount of savings required upfront and makes saving for a deposit more achievable.
First Home Super Saver Scheme (FHSSS)
The FHSSS lets first-time buyers make extra contributions to their superannuation and later withdraw them to fund a house deposit. Since the funds are taxed at a lower rate than regular income, this scheme can help you accelerate your savings.
Key Takeaways
Saving for a house deposit doesn’t have to feel like a monumental task. By using these seven savings hacks, you can make steady progress toward your goal. Whether you're asking, "How much do I need for a house deposit?" or considering no deposit home loans, having a savings strategy in place will put you in a stronger position to secure your dream home. Get started today with clear budgeting, smart financial decisions, and leveraging the available resources. Every little bit you save brings you one step closer to holding those house keys in your hand.Frequently Asked Questions
How much deposit do I need for a home loan?
Generally, you’ll need 20% of the property price, but some loans offer options with a lower deposit.
Can I get a home loan with no deposit?
Yes, there are no deposit home loans, but they are limited and often require a guarantor or other financial support.
What are low deposit home loans?
These loans allow you to buy a home with a deposit of as little as 5%, but you may need to pay Lenders Mortgage Insurance.
How much do I need for a house deposit?
Typically, a house deposit is 20% of the purchase price, but it varies based on the loan type and lender requirements.
What is the First Home Loan Deposit Scheme?
The FHLDS helps eligible first-time buyers purchase a home with a smaller deposit by covering the cost of Lenders Mortgage Insurance.
How can I save faster for a house deposit?
Automate your savings, audit your spending, clear debts, and explore government schemes to save faster.
Conclusion
Saving for a home deposit can seem daunting, but with the right approach and these smart strategies, you’ll be well on your way to owning your dream home. Whether it’s through government schemes, cutting unnecessary expenses, or boosting your savings through automation, every effort counts. Remember to stay disciplined, monitor your progress, and explore all available options to accelerate your savings plan.
Disclaimer: Unless otherwise specified, the opinions expressed in this article are strictly for general informational and entertainment purposes only and should not be taken as financial advice or recommendation. Views are subject to change without notice at any time.
Written By
The Craggle Team
