In order to be approved for a home loan you need to show that you have some genuine savings and future income. Most lenders ask for a minimum 5% deposit before they approve your mortgage. For a young twenty something, this can be a terrifying task. The idea of saving up to $30,000 may seem impossible, but it isn’t. Here are five simple ways you can start cutting costs and saving money for your deposit.
Put away a percentage of your pay
One of the most tried and trusted forms of saving is simply putting away a percentage of each of your pay cheques. Work out how much you truly need to survive each week by breaking down your expenses. Once you have worked out the base figure you need for each week, save the remainder to a different bank account to begin accumulating funds for your deposit. A good way to prepare yourself for saving is to check out a mortgage calculator and get an idea of what your repayments might be.
Sell any unwanted goods
When saving for this deposit, every dollar counts. Go through your belongings and sell anything you no longer need. Everything from old DVDs, books and game consoles can all be sold on eBay or even through Facebook on local buy, swap, and sell sites. It may not seem like much but after a few sales you will be a few hundred dollars richer and closer to that elusive 5% deposit.
Cut down on the fancy stuff
Reducing your spending on luxuries such as bought lunches, coffees and streaming subscriptions like Netflix can lead to surprising savings over twelve months. Put things in perspective – if you are an avid coffee drinker, you may be spending up to $8 a day on two of those delicious lattes, multiply that by five days a week over a full month and you have spent $160 in four weeks. Saving this money for twelve months will result in almost $2000 of extra money toward your deposit! The same applies to purchasing lunches rather than bringing them from home. These may not seem like big savings at the time, but by the end of the year you will certainly see a difference toward your home loan deposit.
Turn your savings into a competition
We all love a game and Australians are especially competitive, so why not turn your saving plan into a sport? Compete with your partner to see who can save the most by the end of each month. This can be done on a small scale with coin jars or a larger operation with separate bank accounts. Whichever method you decide, keep track, set goals and keep yourselves motivated with healthy rivalry.
Increase your income
Take on extra work in your current job, or consider working a second. While this isn’t an ideal way to save money as it can be quite stressful, there is no doubt that it does reap results. If a second job really doesn’t appeal to you, rethink your talents and hobbies. Can you turn your skills into a paid job? Sell your crafts at markets or offer your special skills to people for a small fee. You may be surprised at how you can turn your talents into a secondary income.
The most important thing to remember is to be dedicated. If you catch yourself thinking of that second coffee, remind yourself of your goals and get back on track. Saving for a home loan deposit is not impossible if you know how to restrict yourself and keep your eyes on the prize.Back « How to cut years off your home loan
Instantly compare home loans which suit your needs, and get the banks to work for your business.