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Buying Your First Home: How To Save Money For Your First House Deposit

Buying Your First Home: How To Save Money For Your First House Deposit

Abbie
February 11, 2021

Buying your first home can seem like a dream come true. Choosing the perfect suburb to move into, crafting an interior full of furniture and art that you love, and moving day- the day you’ve always dreamed of, where you finally get to call your own place home.

If you are just beginning your journey towards purchasing your first home, or even if you are on the path to buying a second, this guide will walk you through some easy tips and tricks to save money for your house deposit and help you turn your dream into a reality.

Prepare A Budget

Before you approach the buyer’s market as a first-time buyer, it’s essential to understand where you sit financially, and where you are aiming for in terms of house pricing. 

It might sound obvious, but creating a proper budget and understanding the ins and outs of owning a home often gets forgotten when people decide to purchase their first home. When considering buying your first home, a great way to start is by preparing a budget and getting your finances sorted. In doing so, you can understand how much you might need to save and how much you will need before you can apply for a home loan.

To create an accurate budget, know:

  • what finances are coming in and going out each month
  • how much you can afford to save weekly/fortnightly/monthly/yearly for your deposit
  • where you can cut back

Once you understand your finances, you can begin thinking about your deposit amount, researching, and creating a timeline for achieving this goal. 

Get Into The Mindset That You Already Own A Home

This might not be easy for some people, but if you want to learn how to save money for your first house deposit, we recommend planning your finances as if you already own your home.

Quite often, mortgage repayments are significantly higher than renting, mainly if you are used to living with other people or are still living with your family. It is wise, then, to consider how you will afford to own your home once it comes to fruition. 

Owning a home comes with a whole array of costs that you need to consider before buying. Costs such as council rates, maintenance and repairs, insurance, and mortgage repayments are all extra costs you likely won’t be used to paying, so it is essential to know that you can afford these once you purchase your first home. 

When looking at your budget, plan out as if you already have these expenses. Put a rough estimate of what those costs will be into a savings account to purchase your house. 

When you finally buy your house, you will already be prepared for the added expenses.

Check If You Are Eligible For Government Assistance

When starting the process of saving for your first home purchase, it is good to know whether or not you will be eligible for Government Assistance, and if you wish to use it. The First Home Owners Grant or The First Home Super Saver are just two of the many schemes the Government has available to aid in purchasing your first home. 

Each state has its legislation and criteria as to what you might be able to apply for, and some have terms and conditions you must consider before deciding to utilise one of the schemes. Still, they can be an excellent way of making your goal of purchasing your first home a reality. 

We recommend doing your research and considering the pros and cons of any of the Government Schemes for which you might be eligible.

Downgrade Or Sell Your Car 

Although this step depends on your situation and where you currently live, if saving money for your first house deposit is something you are serious about, you might want to consider downgrading or selling your car. 

Most people don’t know this (or they choose to ignore it) but next to home-owning, owning a car is one of the biggest expenses most of us have. Once you tally up the weekly fuel costs, car repayments, repairs, registration, insurance, and road-side assistance- it often adds up to a lot of money. When doing up your budget, we recommend looking at how much your car costs you each month. 

Is this going to be sustainable when owning a house, along with all your other monthly expenses? 

And most importantly, is it really necessary? 

If you are in a position to do so, downgrading your car to something more affordable might be a great way for you to save money for your first house deposit. Or, for the couples who are looking to purchase a house together, consider selling one car and car-sharing, cutting the cost of your transport in half. 

Alternatively, if you live in an area with an excellent public transport system, consider swapping your car for the bus, train, bike, or walking. Although there are costs involved in taking public transport, you might find it is significantly cheaper. Plus, these alternatives often allow you to get in some exercise each day.

Great for your health, and great for your wallet, too!

Rent Out A Room, Downsize Your Current Living Arrangements, Or Move Back In With Your Family. 

When saving for your first house deposit, you might want to look at your current living arrangements to see how much you pay each month.

For most people, the costs are enormous. This is why many first home buyers often choose to downsize their current living arrangements, rent out a spare room, find new housemates, or move back in with their family to save money. 

And we couldn’t agree more!

You’ll see a massive increase in your savings by lowering your current housing costs, particularly if you hope to purchase your first house quickly.

Rent and utility bills can add up, so sharing this expense with others or cutting down on the amount you pay, could help you buy that house sooner. 

These options might not be the most favourable for some, nor the easiest, but when you add up the total cost of rent, electricity, and internet you save each month, it is well worth the sacrifice!

Deal With Your Debt

If there is one thing you don’t want to do when going into more debt with your house purchase, it’s doing it with outstanding debt.

Minimising your debt sooner rather than later can lead to you potentially paying less interest, meaning you can instead put that money toward saving for your first house deposit.

Depending on your circumstances, If you have multiple debts, you may also find it worthwhile to consolidate them as this helps you reduce the fees you pay, whilst making repayments simpler. Otherwise, you may want to start with the debt accumulating the most interest and work your way back from there, focusing on repaying that before purchasing your home.

Sell Your Things

Selling your stuff is one of the best ways to save extra money for your first home, especially if you are looking to fit out your first home with new furniture and decor. 

Selling old items such as electronics, furniture, jewellery, books, baby items you don’t use anymore, old clothes, or anything else that is still of value can add up to a large sum of money to put into your savings account. 

Depending on what you choose to sell, you can save thousands of dollars towards your house.  

We recommend sites like Amazon, eBay, Gumtree or your local Facebook ‘buy swap sell’ to sell old items.

Cancel Your Subscriptions

While subscriptions are excellent if utilised, most people have multiple subscriptions to music streaming sites like Spotify, movie sites like Netflix and Stan, gaming sites, and of course, the dusty old gym membership, that rarely get used.

Over time, having multiple subscription accounts can add up. Particularly if the subscriptions barely get used.

If you are a subscription hoarder, you might be able to save a decent amount of money each year to put towards purchasing your new house. 

It might not be thousands of dollars, but reassessing your subscriptions and knowing how much they cost you each year might come at a surprise to you.

Cut Out Drinking and Smoking

Alcohol is expensive. So are cigarettes. 

A $15 pack of cigarettes per day amounts to $5,475 per year. 

For drinks, if you are regularly indulging in nights out or parties, the total cost you might be spending when added up in a yearly rate can be close to the above- if not more.

Cutting down the amount you drink and smoke will have a significant impact on your savings account, getting you closer to affording your first home. 

Plus, your health will thank you later.

Create A Second Income For Yourself

If saving money for your first house deposit is a priority, but the timeline to get there is a little longer than you would like, creating a second income stream for yourself is an excellent way to make it happen sooner rather than later. 

There are many viable ways of creating a second income for yourself, but it depends on your passions and skills.

Here are some ideas:

  • If you are into crafts or excellent at graphic design, you could create an Etsy store and sell your items or printables. 
  • If you are good at writing, you could take up Freelance Writing or Editing.
  • If you love teaching, there is always a high demand for online English teaching jobs. 
  • You could start working as a website builder.
  • You could walk dogs on the side.
  • You could drive for Uber or Uber Eats on your days off.
  • You could start a second job and take night time shifts to not clash with your day job.

The list of ways to earn extra income are endless, and they are well worth considering if you would like to increase your savings quicker. However, it is essential to remember that buying a house doesn’t have to be a sprint- it is a marathon. 

Taking the time to save and purchase your first house is a much better process than rushing it. 

Our recommendation is to do your research, find what you are passionate about or knowledgeable in, and go for it!

And don’t forget, you can always ask your current boss for a raise!

To Conclude

You’ve created a budget, saved the money, and now it is time to buy your first home. Congratulations! You did it.

If you've already taken the next step and found your dream home and now want to make an offer, first you should talk to one of our experts. We can help you understand the legal aspects of buying property and so that you can make your offer with confidence.  

Buying your first home feels like a dream come true, and it truly is. Especially when you know how hard you worked to make it happen.

It’s not something that happens overnight. It takes time, hard work, and a lot of reassessing before it happens. But when you finally own that home, it is well worth every bit of it!