Tips and habits to grow your home loan deposit and strengthen your application.
One of the first things that comes to mind when thinking of purchasing our first home is the deposit. Here are some tips and habits that can help you both grow your deposit and strengthen your home loan application when the time comes.
Tips and Habits
Our spending habits have the power to super-charge us toward our home ownership goal, or sabotage it (you can read about how our spending habits affect loan applications here). Below are some habits that can help boost your savings:
If you set an automatic transfer of your savings as soon as your pay arrives, you will hardly miss it! (But if you don’t, you might feel you can hardly live without it.)
Budget for Fun
Do you have an outing or special occasion coming up? You don’t have to say no, just set a realistic budget for yourself (and keep to it).
Breaking down your larger target into smaller milestones makes the task feel more manageable and provides opportunities to celebrate your progress! (This will also help you stay positively motivated to save when you have to say no to spending.)
Ditch the Delivery Service
Covid may have us splurging less on great Melbourne coffee, however food delivery services have boomed. Save by ordering direct from the store, or change it up by finding a great recipe online and giving that a go instead.
Regularly check and monitor what you’re using, and what you’re paying for. Don’t pay for what you don’t use (or keep what you feel you can do without).
Used wisely, membership and credit cards that offer cash back can put noticeable money back in your pocket. Note, no rewards warrant over-spending, and it’s important to pay credit card balances monthly.
Regularly connect with people who can help guide and motivate you toward your goal. Having a team in your corner can increase your chances of success.
Hide Your Savings
Consider a quality savings account that is completely separate from your regular bank accounts – potentially with a different financial institution.
Know what makes you tick and tap into that as a way of keeping yourself inspired and motivated. This may be through a vision board, a goal tracker, regular affirmations, visiting the area you wish to purchase in, etc.
Just get started!
Regardless of where you are, the best and most powerful way to achieve your goal is to start.
Have a target.
One of the fundamental steps to saving your deposit is to have a target. Things to consider when establishing your savings target include:
- Your current financial position
- Your borrowing power
- How much you want to spend
Once you have identified your target, put it in writing along with your end goal – the more detailed and specific you can be, the better!1 If you’re not sure how to work out an appropriate target, we’re happy to help.
Know where your money is going.
If you’re not already intimately familiar with where your money goes on a regular basis, it’s time for a date with your bank statements. Reviewing your past spending is eye-opening, and the first step to helping you take control of where it goes in the future – an essential part of maintaining any savings plan.
Have a plan (and stick to it).
Once you’ve identified your target, your position and your spending habits (to date) you have what you need to make a plan – we could call this a budget – to make sure our expenses are met, and our savings can grow.
Along the way things might not always go according to plan, don’t be disheartened. Always keep your eye on the prize and get back towards your savings path if you stray.