10 Simple Tips for Saving Up a House Deposit

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Are you ready to own a home of your own? There is no question that there are property deals to be had right now with homes more affordable than in a long time, especially for the first time buyer. But there is a catch. Banks willing to give out mortgages are requiring larger deposits than they previously were. But don’t worry, if you follow these ten simple tips you’ll have your house deposit saved up faster than you anticipated.

1. Get Out of Debt

As long as you are paying out money each month on debts – especially high-interest debt like credit cards – you will have no hope of saving up enough money. The first step is to pay off your existing debt. There are a few ways to go about this:

• Consolidate – make a list of all of your outstanding debts. All of them!
• Prioritize – the debts with the highest interest rates, often store cards and credits cards, are your first priority to pay off. Get one of them paid off, then focus on the next highest interest debt. Keep going until they are all gone.
• Transfer debts – if you have a line of credit, or have access to a personal loan at a reasonable rate of interest, it might be a good strategy to consolidate all of your debts into one monthly payment, especially if it allows you to do away with higher interest debts.

2. Budgeting

Budgets are boring and no one likes to do them. But they are the only way to get a handle on your finances. And you will never see that house deposit saved up until you get to grip of your finances. Whether you do it with a piece of paper and a pencil, or in a spreadsheet, the basics are the same.

• Income – total all of your monthly income so you have an idea of what you have available to spend each month. If your monthly income fluctuates (you are a freelancer or work on commission) then you need to plan even more carefully each month so you can adjust as your fortunes rise and fall.
• Expenses – you need to list every bill which has to be paid every month. Also list everything which is paid quarterly or annually (car insurance, house insurance, health insurance, Christmas, birthdays) all of which should be budgeted for.

Until you go through this exercise, you will have no idea where your money is going to. This is also the only way that you can begin to determine where you might be able to make savings – and making savings are the secret to growing your house deposit.

3. Mind Over Matter

Now that you have a clear picture of your financial comings and goings, the hard work begins. Go back through your list of expenses and ask yourself what is more valuable to you – owning a house or keeping up this expense. Some expenses are fixed, but in almost every case there is a way you could save money. It may not be as much fun, but if that house is a strong enough goal for you, then you will find the motivation to do it. Reducing grocery bills, eating out less, buying fewer clothes, giving up alcohol or cigarettes for a while, staying home and watching TV, walking or taking the bus instead of driving the car, or moving back home with your parents – these are all choices you can make to help build your house deposit. Every time you go to spend money, imagine your dream home and ask yourself which you want more, the house or the Starbuck’s frappucino? The more frequently you choose your home over Starbucks, the closer you will be to realising that dream.

4. Earn More

Once you have figured out ways you can save money, the next thing to consider is whether you could earn more as well. Let’s say you could come up with a way to earn an extra $50 each Saturday – by babysitting, taking another job, selling cupcakes etc. – that would be $200 per month towards your goal and $2400 over the course of a year! That goes a long way to meeting your goal. Also, look at your regular job. When was the last time you had a raise? Is it time to move up to the next step and apply for a new position or new job? If it comes with a bigger salary, then it would be worth it to get you in to your new home sooner.

5. Automatic Deductions

If your employer offers an automatic deduction into a savings vehicle, then take advantage of this. If you never see the money in your account in the first place, it is a lot harder to spend it. Even if you can’t set it up through work, then set it up yourself with your bank so that the money comes automatically out of your account the day after you’re paid and into a different account. You will quickly forget about it and won’t even miss it. Before you even know it, that money will be multiplying within your home deposit account.

6. Build Up a Deposit

Between the cutbacks you’ve been making, the extra income you’re earning, and the automatic deductions you have set up, you should be amassing a decent deposit towards your house. It might help keep you motivated to keep a spreadsheet or a graph with your target amount and your monthly progress towards that target. Sometimes a visual reminder of getting closer to your dream can help you stay on track.

7. Use a High Interest Account

While you could save your deposit money under your mattress, there are much better savings vehicles around. Use the power of the internet to shop around for the best high-interest savings account. If you’ve been with the same bank since you were a child, it might be time to shop around to see if they are offering you the best deals. It’s easy to transfer money online, and if your house savings account is with a different bank to your regular banking, you will be less likely to dip into it for day-to-day expenses.

8. Family Assistance

More and more people are finding their way onto the property ladder with assistance from their parents or other relations. Is there any chance your family would give you a gift (an early inheritance?) or a no-interest loan? It can’t hurt to ask.

9. Credit Record

As you’re building up your deposit, you need to start thinking about getting a mortgage. One of the things you should do is make sure your credit record is in as good a shape as you can. Request a copy from one of the large credit agencies and check it over to be sure there are no errors. If there are any errors on your credit record, then you will need sufficient time to correct them. There is plenty of information on the internet on how to improve your credit rating.

10. Shop Around

When you have started to put together a decent house deposit, and your credit record is in good shape, it’s time to start to shop around to see what kind of a mortgage you can get. Ask lots of questions and don’t be afraid to play one off the other – you are the consumer and deserve to get the best deal you can. Ask if there is any first-time buyers assistance available.

If you follow these ten tips carefully, you could conceivably come up with your house deposit within a year or two. There are no guarantees it will be easy, but the reward of a new home of your own is definitely worth the sacrifices. Happy saving!