Last Updated: 25th November, 2024
Savings Calculator
Use this calculator to work out how much you’re currently putting away and how quickly you’ll be able to reach your deposit goal. Saving just a little more every week or month can make a huge difference and help you buy a home sooner. If you need help with getting a home loan, call 1300 889 743 or complete our free assessment form to speak with one of our mortgage brokers.How Much Do You Need For A House Deposit?
Generally, lenders require a deposit of at least 20% of the purchase price of the house, along with additional earnings to cover transaction costs such as stamp duty and government taxes. Lenders also do offer home loans if you have less than a 20% deposit. However, you will have to pay Lenders Mortgage Insurance (LMI) and you may have a harder time demonstrating that you can afford to service the loan. You should aim to save at least 5% of the purchase price as a deposit for your home. Depending on the state you’re buying in, you may need to save a little more to cover expenses such as stamp duty and conveyancing costs. A 5% deposit is a great target, as it meets most lenders’ requirements for genuine savings and it’s the minimum deposit required to apply for a 95% home loan. Use our How Much Deposit Do I Need Calculator to determine the amount required for your deposit.Tips For Saving Up A House Deposit
So you’ve figured out how much you need for a house deposit. Now comes the crucial part: saving the money. It might seem like a daunting task, but with the right approach, you can achieve your dream much faster than you think. Here are some simple and effective tips to make saving for a deposit easier.Set A Clear Savings Goal
Figure out the average house price in your desired location. You can check out real-estate platforms online to see the selling prices of houses in the areas you are interested in or visit auctions. Knowing exactly how much you need for your house deposit is crucial. A typical deposit can range from 5-20% of the house price. Once you have this figure in mind, break it down into smaller, manageable targets, such as monthly or yearly savings goals. This makes the process less overwhelming and provides clear milestones to celebrate along the way.Open A Dedicated Savings Account
Create a specific savings account for your house deposit. Look for one with a high-interest rate and no fees, which will help your savings grow faster. This separation from your everyday funds reduces the temptation to dip into your savings for non-essential spending, and you can even set up automatic transfers from your checking account to grow your savings effortlessly. Another option is to set up automatic payroll deductions, diverting a portion of your paycheck directly into your house deposit savings. This ‘out of sight, out of mind’ approach can further accelerate your savings growth.Track Your Income And Expenditure
Awareness is key to managing your finances. By tracking your income and where every dollar is spent, you can identify areas where you can cut back. Plenty of budgeting apps and tools are available to help you monitor your spending patterns and adjust accordingly. Creating a budget that allocates funds not just for bills and essentials but also some pleasures helps you avoid feeling deprived and stay motivated throughout your savings journey.Take Advantage Of Government Schemes
- First Home Guarantee (FHG): Allows eligible first-home buyers to purchase with a 5% deposit. The government guarantees a portion of the loan, eliminating the need for LMI.
- Regional First Home Buyer Guarantee (RFHBG): Similar to FHG, but specifically for regional areas.
- Family Home Guarantee (FHG): This program helps single parents or legal guardians purchase a home with a deposit as low as 2%.
Cut Unnecessary Expenses
Review your spending habits and identify areas where you can cut back. Small changes, like dining out less frequently or cancelling unused subscriptions, can add up to savings over time. Redirect these savings directly into your house deposit fund.Manage Your Debts
High levels of debt can impede your ability to save. Focus on paying down high-interest debts first, such as credit-card balances. Consolidating multiple debts into a single loan with a lower interest rate can also make managing and repaying your debts easier and cheaper.Increase Your Income
If possible, look for ways to increase your income. This could involve asking for a raise at your job, taking on extra work or freelancing, or turning a hobby into a side hustle. Additional income streams can greatly accelerate your savings progress.Seek Financial Advice
Professional financial advice can be invaluable, especially for those with complex financial situations or specific goals. A financial adviser can help you create a personalised saving strategy, taking into account your unique circumstances and maximising your saving potential.What Can I Use As A House Deposit?
While genuine savings are ideal, there are various house deposit options to consider:- Government grants
- Commission income
- Inheritance
- Gifts
- Equity from existing property
- Personal loan
- Non-real estate asset sale
FAQs
Helia’s Home Buyer Sentiment Report for 2023 stated that a median-wage couple saving 20% of their income would take 13 years to accumulate a 20% deposit for a median-priced house in Sydney, and eight years for an apartment.
The time it takes to save for a deposit depends on various factors, including your income and expenses, and how much you are trying to save.
For singles, saving a deposit for a median-priced house in Sydney would take 26 years, while saving for an apartment would take 16 years.
Yes, a larger home loan deposit can save you tens of thousands of dollars over the life of your loan. With a bigger down payment you borrow less, which translates into a smaller loan amount and, ultimately, lower overall loan repayments. For example, borrowing $300,000 instead of $400,000 with a 30-year loan at 6% could save you over $100,000 in interest!
See if buying now makes sense for you with our Buy Now Or Save More Calculator.
Yes, you can use equity as a house deposit in Australia. There are two main ways to do this:
- Refinance: Get a new, larger loan on your existing property to free up cash for a deposit on your new home.
- Home Equity Line of Credit: Borrow against a credit line secured by your home’s equity, using the funds for your new house deposit.
By purchasing a home now and paying LMI, you can secure a property at a lower price before potential price increases. While LMI adds upfront costs, delaying your purchase could mean paying more in rent and facing higher property prices in the future. Additionally, buying now allows you to start building equity sooner, enjoying the benefits of homeownership – such as stability and potential tax advantages – and personalising your living space.
Yes, you can borrow without a deposit if you have a guarantor. A guarantor, typically a close family member like a parent, secures part of the loan with equity in their own property. This allows you to borrow 100% of the loan amount, and you avoid paying Loan Mortgage Insurance (LMI). Keep in mind, the guarantor is responsible for repaying the loan if you can’t.
Deciding between buying and renting a property hinges on individual circumstances. While buying offers long-term equity building, stability and freedom to customise, renting provides flexibility, lower upfront costs, and predictable expenses. For a detailed comparison, refer to our comprehensive guide on buying versus renting a property.
