Save for your first home. Really.
Don’t go out on Friday night, eat more cabbage, cancel Netflix, live with your mum. Blah.
How about some helpful advice?
Every bank and major lender will offer ‘helpful’ advice on saving for a deposit for your first home. You could just punch the term into any AI service and get the same results.
At Mortgage Broker Melbourne, we get that saving is hard. It’s also different for everyone.
So, yes, we do have some advice for people saving for a home. But we also have real-life steps you can actually take today to make your home-ownership dream a reality.
Top tips for saving for your first deposit
Some of the classic advice is true, no matter who you are. We can’t argue with this advice.
Save 20% of everything you earn
Consider the 20 / 30 / 50 rule with your salary, 20% goes to home deposit savings, 30% to wants, 50% to needs.
Cut discretionary spending
This is your mother talking: Cut it with all those haircuts. STAN, really? Can’t you just listen to Billie Eilish? Ramen!! In my day it was just 2-minute noodles!
Pay off loans
If you have any debts at all, this is your #1 priority. This includes car loans, credit cards, buy now pay later and store cards.
Save, save, save
To maximise the amount you can borrow, try to prove a history of good savings. Even if you’ve filled your place with beanbags for the past few years, hold off for a while.
Saving for YOUR dream home
A lot of the advice for getting a home assumes everyone wants to live in a leafy inner-eastern suburb like Hawthorn or a bush block on a train line, like Hurstbridge or Sunbury. But for most people saving for a first home, proximity to work and services is one of the main objectives. And this often means trying to buy an apartment or unit closer to the city or large town. Of course, this is where prices start to get eye watering.
A cynic might say that there are three simple rules to saving for a deposit:
- Have rich parents
- Get a job that pays $200,000 plus by the time you’re 22
- Partner up with a surgeon.
For most of us, the real story is much more complicated, and is likely to take a long time.
So the best advice for saving is to take a long-term view. Saving money is a mindset. It involves some sacrifice, but it doesn’t mean you can’t also enjoy your life.
How do you eat an elephant?
The answer is “one bite at a time”.
These tips might not be the mythical ‘Insta side hustle’ that earns you $3000 a week, but they’re worth thinking about:
Spare change: Coins. Remember them? By paying for everyday items in cash, you’ll end up with loose change in your pocket. Collect those coins in a jar. It’s amazing how fast those $1 and $2 coins accumulate. Every few months, deposit the coins into your dedicated savings account. Never make withdrawals from your home loan savings account.
Apps: There’s an app for everything, including saving money. Search online for ‘spare change’ or ‘round up’ apps. You can also get cash back on purchases through apps such as Cashrewards and CashBack. These are well worth a look.
You could also set up a small weekly transfer – say, $10 – from your transaction account to your savings.
Shop cheap: Amazon, eBay and the local shopping centre are easy and convenient. But before you buy a new bookcase, handbag or drill, check out local op shops. Another terrific resource is Facebook; and we don’t mean Marketplace. See you there’s a local ‘Buy Nothing’ group (there are lots of them) or ‘Good Karma’ network. People are giving away perfectly good things every day.
Challenge yourself: This is your mum talking again: Try to go a week, or a month, not purchasing anything except necessities. Shopping can be addictive: those little treats send happy signals to our brains. See if you can fight that urge.
Keep at it
Given the huge sums involved in a property purchase, some of these tips might seem too small to bother with. But, like spending, saving is a habit. Once you see your account slowly increase, motivation to keep at it builds.
Talk to an expert
Mortgage Broker Melbourne’s brokers can’t help you save. But we can help you understand the home loan and property market.
At no cost to you, and with no obligation, we can look at your savings history and property dreams, and find a way to make them add up to a first home!
Get in early and see what you’ll really need to save to get a toehold in the market. We can help you set a target.
Then, all you have to do, is save, save, save.
Contact Mortgage Broker Melbourne today.
Marc has been a professional lender for 28 years. After beginning his career in 1990 with a UK Building Society, he moved to Australia where he held several different retail banking roles. In 1999 it became clear to him that a mortgage broker would eventually become an obvious choice for someone looking for a home loan so he took the plunge and became an independent broker. He hasn’t looked back since!