If you’re like most Australians, you dream of buying your own home one day. But for many people, the idea of saving up a deposit seems impossible. In this article, we will provide some tips and advice on how to save up for a property deposit in Australia. The dream may be closer than you think.
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What Deposit Will I Need?
Ultimately, the amount you’ll need for a deposit will be determined by the purchase price of the property, as well as any state or territory first home buyers grants that may be available to you.
For example, in Victoria the current first home buyers grant is $20,000 for properties under $750,000. So, if you’re looking at purchasing a property for $500,000, your deposit could be $30,000.
The deposit amount is also determined by the lender you go with. For example, some lenders may require a 20% deposit while others may only require a minimum of 5%. Therefore, there’s no universal answer to this question. Once you know what deposit the lender requires and the value of the property, you can then work out how much money you need to save.
Tips for Saving a Deposit
Saving for a deposit can be daunting, but there are lots of little things you can do to make the process easier. Here are a few tips:
Make a budget and stick to it – Budgets are incredibly valuable (although they may sound like a nightmare at first!). Once you know where your money is going each month, it becomes much easier to save.
Automate your savings – Set up a direct deposit from your pay into a savings account so you’re not tempted to spend it.
Cut back on unnecessary expenses – Do you really need that daily coffee? Or those new shoes? Try to find areas in your budget where you can save some money each month. While each saving might sound small, they quickly add up.
Make extra money – If you have some spare time, there are plenty of ways to make a bit of extra money. You could start freelancing, do some odd jobs, or even start a small business. Any extra money you can earn will go towards your savings.
Start saving for a deposit on a property immediately – even if it’s a small amount, saving now will ensure that you meet your goals sooner. Rather than continually delaying your savings goals, make a start today and you’ll be one step closer to owning your own home.
Use a high-interest savings account – One of the best ways to make your money work harder is to put it into a high-interest savings account. This way, you’ll earn interest on your savings, which will help you to reach your goals even faster.
Consider the Rent-to-Buy Scheme
In Australia, there is a scheme known as rent-to-buy which allows you to put your rental payments towards the purchase of your home, and PublicSquare can assist you. This can be a great way to save for a deposit, as you’ll be effectively building up equity in your property from the day you move in. Not only does this give you more time to save a deposit, but you’ll be in your dream home while you do it.
How does the rent-to-buy scheme work? Under the rent-to-buy scheme, you’ll enter into a contract to purchase a property at an agreed price. The purchase price is usually set at today’s market value, plus an agreed-upon amount for the future. For example, if you’re looking to purchase a property in five years’ time, you may agree to pay the current market value plus an additional 20%.
You’ll then pay rent on the property for an agreed-upon period, during which you’ll have the option to purchase the property outright or enter a traditional mortgage.
