Our Top Tips for Saving for a House Deposit

Our top tips for saving for a house deposit

 

Saving for a house deposit can be exciting and challenging, especially for first-home buyers. Aspiring homeowners often face the challenge of cost-of-living pressures, making it harder to save. However, increased interest rates mean that savings accounts are paying significantly higher rates of interest than has been the case in recent years.

At Gateway, we understand every dollar counts, so we've compiled six tips for saving for a house deposit — all designed to help you make the most of your hard-earned money. Whether you're starting from scratch or already have some savings, these strategies will help you make smart financial decisions and take proactive steps towards building your house deposit.

 

#1: Set clear savings goals

 

Setting clear savings goals is the foundation of saving a deposit. It provides you with a clear target to work towards and should keep you motivated throughout the process.

Here are some key steps to help you set clear savings goals:

• Define Your Deposit Target: Start by determining the amount you want to save for your house deposit. Consider factors like the price range of homes you're interested in, the deposit percentage required by lenders, and any additional costs involved in the home-buying process, like legal fees and valuations.
• Break it Down: Once you have your deposit target, break it down into smaller, manageable milestones. Divide the total amount into monthly or quarterly goals that align with your savings timeline. This approach allows you to track your progress and celebrate achievements along the way.
• Consider the Timeframe: Setting a timeframe will help you stay focused and dedicated to reaching your goals within a specific period. You can determine a realistic timeframe by considering your income, expenses, and any foreseeable changes in your financial situation. Meanwhile, be mindful of external factors like changes in the housing market or interest rates — they may impact the timeline.
• Adjust as Needed: While it's important to set ambitious goals, it's equally crucial to be flexible and willing to adjust them if necessary. Circumstances can change, and unexpected expenses may arise. Regularly review and reassess your savings goals to ensure they stay realistic and attainable.

Remember, each milestone reached brings you closer to the ultimate reward of owning your own home. Stay determined, monitor your progress regularly, and celebrate every step towards your savings goals.

 

#2: Create a realistic budget

 

Creating a realistic budget will provide a clear understanding of your financial situation, identify areas where you can cut back on expenses, and redirect more funds towards your savings goals.

• Track Your Income and Expenses: Gather bank statements, receipts, and any other financial records over a few months to get an accurate picture of your cash flow. Categorise your expenses into essentials (like housing, utilities, and groceries) and nice-to-haves (like entertainment, dining out, and shopping). Be honest with yourself and identify areas where you can cut back on non-essential spending to free up more money for your deposit. Instead, be creative and look for ways to have fun while still being mindful of your financial goals.
• Prioritise Debt Repayment: If you have outstanding debts, make debt repayment a priority in your budget. Allocate a portion of your income towards paying off high-interest debts, like credit cards or personal loans.
• Allocate Funds for Savings: Once you've tracked your income and expenses, redirect a portion of your income into savings. Treat your savings as an essential expense, just like paying your bills.
• Review and Adjust Regularly: A budget is never set in stone, so it’s important to review your budget regularly to assess your progress and make any necessary adjustments. As your financial situation or goals change, you may need to reallocate funds or modify your spending habits — stay flexible and adapt your budget to ensure it’s effective in helping you achieve your savings goals!

Utilise our budget planner calculator to track, plan and prioritise where your money is going.

Take control of your spending, identify areas for improvement, and allocate funds towards your savings goals. By distinguishing between needs and wants, prioritising debt repayment, and regularly reviewing and adjusting your budget, you'll be better equipped to save for your home.

 

#3: Minimise lifestyle inflation

 

Lifestyle inflation happens when your expenses rise as your income increases. It's a common phenomenon, but it hinders your ability to save for a house deposit. Minimising lifestyle inflation is essential for maintaining a healthy balance between enjoying income growth and saving towards your goal.

Here are a few things to keep in mind while saving for a house deposit:

• Be Mindful of Your Spending: Before making a new purchase, ask yourself if it aligns with your long-term goals. By being conscious of your spending, you can avoid impulsive purchases and focus on what really matters to you. Alternatively, save for the things you want or find a more affordable alternative, so you can still enjoy them while prioritising your long-term financial goals.
• Avoid Keeping Up with Others: It's easy to get caught up in comparing your life to others and feeling the pressure to keep up. Remember that everyone's financial situation is different — what works for others might not work for you. Instead of trying to match someone else's lifestyle, focus on your financial goals and priorities.
• Re-evaluate Subscriptions and Memberships: Take a critical look at your subscriptions and memberships — are you using them? Can you cancel or downgrade the ones that don’t hold value to you? It's easy for these recurring expenses to accumulate over time, eating into your potential savings.

Finding happiness in the present while still working towards your goals is key. With a conscious approach to spending and making smart lifestyle choices, you can maintain financial stability, increase your savings, and move closer to owning a home.

 

#4: Automate your savings 

 

Automating your savings is a powerful technique that removes the temptation to spend and ensures consistent progress towards your house deposit. By setting up automated transfers, you can effortlessly grow your savings without having to think about it.

Start by opening a separate savings account specifically for your house deposit. We recommend looking for a savings account with no fees and a competitive interest rate to maximise your savings potential, like our Goal Saver Account.

Next, organise to set up automatic transfers from your main account to your dedicated savings account. With Gateway Bank, for example, you can schedule transfers on your payday or a specific day each month — all you need to do is determine the amount you can comfortably save from each payday.

Start with a conservative amount and gradually increase the deposit over time as you become used to your reduced disposable income. Remember: even small, consistent deposits can add up over time.

 

#5: Explore additional income streams

 

You can supercharge your savings efforts by exploring other opportunities to generate extra earnings. Here are some strategies to consider:

• Sell Unneeded Items: Evaluate your old belongings and identify items you no longer need. Platforms like eBay, Facebook Marketplace, or local buy/sell groups provide opportunities to turn preloved items into cash.
• Side Gigs and Freelancing: Utilise your talents to earn extra income outside your primary job. For example, you could explore platforms that connect freelancers with potential clients or offer services in high-demand areas.
• Participate in Online Surveys: Research reputable survey platforms to share your opinions and earn some additional income. Many companies offer compensation for participating in online surveys. While the payouts may be modest, they can accumulate over time, contributing to your savings.
• Monetise Your Hobbies or Talents: Are you skilled in art, writing, babysitting, photography, or playing music? Consider transforming your passions into profitable ventures. Explore options such as selling handmade crafts online, freelance writing, providing baby-sitting services, offering photography services, or performing at events.

Increasing your income requires dedication, effort, and sometimes stepping out of your comfort zone. It's important to find a balance between maximising your earning potential and maintaining a healthy work-life balance. Prioritise activities that align with your skills and interests, ensuring a sustainable and enjoyable source of additional income.

 

#6: Take advantage of First Home Buyer Grants and other Government incentives 

 

If you’re a first home buyer, Government programs, grants, and incentives are available to help you save for a house deposit. These opportunities can provide a significant boost to your savings efforts.

For example, The Home Guarantee Scheme (HGS) is an Australian Government initiative to support eligible home buyers to buy a home sooner. The Scheme is administered by Housing Australia.

Other discounts and schemes are available, and vary from state to state (or territory), but here’s a snapshot:

New South Wales:	Victoria:	Queensland:
No stamp duty on new properties under $800,000, existing properties under $800,000, or vacant land under $350,000.	No stamp duty on properties under $600,000.	No stamp duty on property under $500,000 or vacant land under $250,000.
Discounted stamp duty on new properties between $800,000 and $1,000,000, existing between $800,000 - $1,000,000, or vacant land between $350,000 - $450,000.	Discounted stamp duty on properties between $600,000 - $750,000.	Discounted stamp duty on properties under $549,999 or vacant land under $399,999.
$10,000 grant when purchasing new properties under $600,000 and owner-builder/building contracts worth under $750,000.	Discounted stamp duty off-the-plan properties under $1,000,000.	$15,000 grant for new properties under $750,000.
	$10,000 grant for new properties under $750,000.

Australian Capital Territory:	South Australia:	Western Australia:
No stamp duty on newly built properties under $470,000 or vacant land under $281,200.	All first-home buyers pay some kind of stamp duty.	No stamp duty on properties under $430,000 or vacant land under $300,000.
Discounted rate on newly built properties between $470,001 - $607,000 or vacant land between $281,201 - $329,500.	No stamp duty on new properties under $650,000 or vacant land under $400,000.	Discounted stamp duty on property between $430,000 - $530,000 or vacant land between $300,000 - $400,000.
$7500 grant for new properties of any value.	Discounted stamp duty for new properties between $650,000 - $700,000 or vacant land between $400,000 - $450,000.	$10,000 grant when buying land & building up to $750,000 south of the 26th parallel.
	$15,000 grant on the purchase or construction of new residential properties under $650,000.	$10,000 grant when buying land & building up to $1,000,000 north of the 26th parallel.

Tasmania:	Northern Territory:
Full stamp duty applies.	Household Goods Grant of up to $2,000 available.
$30,000 grant for new properties of any value.	No stamp duty for a house and land package from a building contractor.
	$10,000 grant for new properties of any value, subject to eligibility.

Government programs and incentives can change, so it's important to stay informed about any updates or new initiatives. Follow official government channels, sign up for notifications, or consult with local housing authorities so you don't miss out on any new opportunities.

 

How Gateway can help you put these house-saving tips into play

 

Wondering how to save for a house deposit fast? While there’s no one-size-fits-all answer to this question (everyone’s circumstances are different), we hope the saving tips above can help boost your savings and get you closer to owning your home.

In the meantime, we can help with additional savings and passive income through our Goal Saver Account. This savings account rewards you for your savings with competitive tiered interest rates and no monthly account keeping or service fees — you can even open an account in under five minutes.

Plus, once your deposit is ready to go, we have various owner-occupied home loans with competitive rates, each with its own unique benefits and opportunities to help you save for the future. Get in touch with our team for more information or apply online today.