Best Review - Top 6 Ways to save for a down payment on your first home

H

ere are some simple saves that will get you there faster.

The deposit or down payment on your first home can seem like a significant obstacle. Without it, you just don’t have a hope of getting onto the property ladder. But how do you save five figures-worth of cash when you don’t have a lot of it to start with? Anyone can save for a down payment for a first home – these are some of the smartest ways to do it.

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Top 1

Pay off your other debts first


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The cost of your existing debts will always outweigh any interest that you earn on savings you’re putting aside for a down payment. So, before you start saving for that first home, clear your other debts first. The additional bonus here is that you’ll also be improving your credit score at the same time as getting debt free – both of which will make you a more attractive first time buyer.


Top 2

Get used to saving your windfall cash

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Windfall cash is anything that you weren’t expecting to receive. So, that could be something as large as an inheritance or something as small as a $10 win on a scratch card. If you get used to putting any additional cash that you have into a savings account instead of spending it then you’ll quickly start to build up more of a reserve.


Top 3

Look for ways to spend less


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The more room you can create in your budget, the more you’ll be able to put aside to save for your down payment. That may mean a pretty ruthless assessment of how you currently spend your cash and what kind of changes may be required. Cut out anything that you consider to be a luxury, from buying expensive food items to a gym membership, and then identify the big expenses that could be reduced, such as spending on a car or holidays. If you’re serious about getting on to the property ladder then these temporary sacrifices will be worth it.

Top 4

Make your money work harder

It’s difficult to get a decent interest rate on savings right now – but rates are going up. Plus, some of the newer and more innovative savings vehicles tend to offer better interest rates than established institutions and high street banks. Before you start saving, look around for the best savings vehicle for your cash. Are you willing to lock in your savings for a period of time? If so you’re much more likely to get a better deal.

Top 5

Move home

For most of us, the single biggest monthly expense is rent. If you can tolerate moving home to your parents, even for a short period of time, you can put aside the cash you would have used for rent and achieve your down payment goals much faster.

Top 6

Be patient

Saving for a down payment when you’re starting from scratch takes time. The average home price is currently $252,000 and if you’re earning an average salary then you’re going to need at least two years of putting aside at least 10% of it to get to the minimum level of down payment. Be patient, stick at it and don’t give up.

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