How to Save Up For A Home Deposit Faster

May 11, 2020 in Personal Finances - No Comments - 3 min read

Home deposit

Buying a house gives you the sense of security and it is considered a long-term investment. There are multiple advantages to owning your own home.

  • Owning a home offers the long-term benefits of security, equity and potential growth in personal wealth.
  • The value of a home will appreciate over time and if you decide to sell, you can earn a profit off the sale.
  • When you buy a house it becomes your legal property, which allows you greater freedom in its use without restrictions often enforced by a Landlord.
  • Being a Homeowner allows you creative control of your property. You can alter the property, including décor changes, landscaping and renovations, to suit your needs and your style.
  • There’s the option of buying to rent which enables a Homeowner to generate income from renting out the property. You can put the additional income towards paying off the home loan.
  • Improve your credit profile by paying your repayments on time. You’ll have a large investment to your name, but paying your monthly bond repayments on time increases your credit score.
  • You have the option to refinance your bond amount should you wish to withdraw a large amount of money to pay for major purchases.
  • There is an opportunity to save money in the long term as there are possible tax deductions related to income-generating properties.

Why Save for a Home Deposit?

Although a home deposit is not a requirement when getting a home loan, it is good to save up for one. Having a home deposit reassures the seller that the buyer is serious in his or her intention to purchase. It also reduces the perceived risk of funding the purchase for the bank. Plus, you are more likely to get a more favourable interest rate from the bank.

Create A Budget

To determine how much money you can comfortably save towards your home deposit, you need to have a starting point. The best way to begin is to draft a budget, track your expenses and allocate funds towards your savings goal. Once you have evaluated your financial situation, decide on the amount that you will save up to reach your financial goal. A pro tip is to create a separate savings account to keep the home deposit in. Plus if you automate your savings, then you don’t have to think about doing it monthly.

Cut Wherever Possible

The first step of creating a budget and evaluating your financial situation may alert you to certain aspects of your money that can be improved. By tracking your expenses, you may decide to cut a few that may not be necessary for you. In addition, you may implement strategies to get out of debt faster so that you free up more money to save towards your home deposit.

Get A Good Deal

When the time comes for you to apply for a home loan, be sure to shop around for the best deal. With the leverage of a deposit, you may be able to get lower interest rates which will decrease your overall expenses.

Take Home: How do you save your home deposit faster?

Like with any goal, it can only be achieved with proper planning, setting deadlines and having the motivation to see it through. When raising your home deposit it is important to evaluate your finances. Then see where adjustments can be made and allocate as much money as possible towards your savings goal.

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