Saving for a home loan deposit can really focus your thinking… and your savings. But what if you’re finding it difficult or challenging to save for a home loan? Not to worry! There are ways to get to your savings goal more quickly than you ever really believed possible.

Here are our best tips on how to get money in the bank right now for your home loan deposit.

How much should you save for a home loan deposit

The starting point in saving for a home loan deposit is to know how much you need to save. And the starting point for how much you need to save is to figure out the approximate cost of the home you want to buy and your ballpark savings goal.

According to the Australian Bureau of Statistics, at the end of the June 2023 quarter, the mean price for a residential dwelling in Australia was $912,700. This was up from $887,500 in the March 2023 quarter.

Of course, your individual goal will be determined by the state and suburb you want to buy in, the type of home you’re looking for and the size of the house and the land (among other things). But understanding the market is a great place to start!

Top Tips When Saving for a Home Loan Deposit

Tip 1 – Know your market and eligibility for assistance

If you’re a first home buyer you may be eligible for a government scheme which will help you onto the property ladder.

First Home Owner Grant

A First Home Owner Grant (FHOG) can be used towards your deposit for the purchase of a new home. Eligibility criteria vary between states and territories. In Queensland, for example, eligible first-time home buyers under the FHOG can receive $15,000 towards the purchase or building of a new home. In NSW, $10,000 is available for a first new home.

First Home Guarantee

There are different government initiatives to assist eligible home buyers through the Home Guarantee Scheme (HGS) administered by the National Housing Finance and Investment Corporation (NHFIC). One of these is the First Home Guarantee (FHBG).

FHBG supports eligible first home buyers to purchase a home with as little as a 5% deposit without paying Lenders’ Mortgage Insurance (LMI). Strict eligibility criteria apply for a limited number of places.

First Home Saver Super scheme

You could leverage your super via the First Home Saver Super scheme (FHSS). It allows you to make voluntary contributions to your super fund to help save for your first home. If eligible for the scheme, your voluntary contributions (and associated earnings) can be released, to help towards your first home purchase.

Maximum release amount limits and conditions do apply to the scheme, however, so speak to your financial advisor for advice.

Tip 2 – Set (and write down!) your goal for saving for a home loan deposit

Research shows that if you have a set goal, and write it down, you’re more likely to achieve it. A savings goal of 20% of a home’s value is good to aim for. A deposit of anything less than 20% will likely require the purchase of Lender’s Mortgage Insurance (LMI). Lenders require this insurance, to protect them against borrowers defaulting on their home loan.

So figure out the number you need to save, and write it down!

Tip 3 – Consolidate debts and automate your savings

Simplify your savings plan by consolidating your debts into one. To do this, you may need to take out a personal loan, and use it to pay off all your outstanding debts, such as a car loan, credit cards and student loan.

Having one regular loan repayment can also keep your budgeting as streamlined as possible. We can help with researching interest rates on personal loans, to make sure they’re lower than your existing loan rates.

In line with making things as simple as possible, set up a specific savings account for a home loan deposit account. Ensure you have a recurring deposit into the account from your salary (and don’t deviate from it!).

Tip 4 – Analyse your current spending and make savings

It’s important to know where your money is regularly going. We’re in an increasingly cashless society, making it harder to keep track of our daily, weekly and monthly spending. You could make significant savings from incremental amounts, adding up to thousands in a year.

Start with your most recent bank statements. Go through every line and dollar spent. Decide on where you could make savings. Our top tips for regular spending savings are:

• Cut your daily takeaway coffee to once or twice a week.
• Commit to public transport rather than paying for parking, taxis or Ubers.
• Commit to making the most of your gym membership (or cancel it).
• Utilise coupons where you can.
• Cut down on takeaways. Use a recipe generator like Supercook to reduce food waste and cook through every ingredient in your fridge and pantry.
• Use an app such as Stocard to collect and use points on shop loyalty cards.
• Decide on whether you can live without a pay TV subscription or two.
• Reduce your weekly grocery spend by comparing unit prices, taking advantage of specials, and switching to home-brand items.

Tip 5 – Make a budget and stick to it

Now you’ve consolidated your debts into one, and analysed your spending habits, it’s time to create a budget – and stick to it. There’s a good budgeting guide on the MoneySmart website.

Bonus tip – Get expert advice!

Our expert Lending Loop team can help you consolidate your debts and give you advice on saving for a home loan deposit. And when the time comes, we can help you find the best home loan from over 40 of Australia’s biggest specialist lenders and banks.

Give us a call today at Lending Loop!