The days of rocking up to the bank and scoring a 100% loan are virtually gone: these days, lenders want to see evidence of some genuine savings before they hand over finance to fund your first home.
So, if you want to have your own little piece of property to call home – a place where you can paint the walls any colour you like, and hang paintings on every other wall – you’ll need to start saving.
1. Save 10% of each paycheck
An oldie but a goodie, this is a tip that always works if you’re prepared to stick with it. You simply need to pay yourself before you pay anyone else.
The best way to achieve this is to designate one savings account – ideally at a different bank to your normal lender, to make it harder to access the money – and then transfer 10% of your net pay each pay period. It might mean you have to miss out on a few restaurant meals out throughout the month, or you may have to brown bag your lunch when you run out of cash towards the end of your pay cycle, but it will be worth it in the long run.
2. Sell stuff on eBay
eBay is the ideal place to offload your unwanted household items in return for cold hard cash! From old curtains and CDs to unused fragrances, cosmetics and clothes, eBay can generate hundreds of dollars for you in a matter of weeks, if not thousands.
3. Pay off your debt
This isn’t exactly a straight savings tip, but it is by default, as you’ll be saving on interest payments. Paying off your debts makes sense for two main reasons:it will increase the amount of money you can borrow, and it will free up your cash to use towards mortgage repayments. It definitely pays to down a nut out a budget now so you can get rid of your credit card debt and personal loans before you commit to a mortgage worth hundreds of thousands of dollars!
4.Eliminate the luxuries
Although it’s no fun, tightening your budget a little can be an effective strategy for saving money for your first home deposit. You can start by eliminating or downgrading the luxuries from your life, and then using the cost savings to fund a savings account. You don’t have to skip everything at once, however; instead, eliminate one luxury per month, pocket the savings, and then move on to the next thing. Over a period of twelve months, you could easily save a few thousand dollars by alternating between life’s little luxuries! For instance, you could:
Put your cable television subscription on hold for one month (saving = $80)
Take your lunch to work every single day for a month (saving = $200)
Don’t hit the shops for any new clothing for 4 weeks (saving = $300)
Skip alcohol for one month (saving = $100-$500)
5. Get a part time job
If your serious about saving a home deposit and your finances are already stretched to capacity, then consider looking for extra work. By working a couple of evenings a week, you could easily add $1,000 a month to your bank account, or $12,000 over 12 months.