How to achieve your home deposit savings goal
Saving for a home deposit can be a daunting task. But with the right strategy, it is possible to reach your goal. Here’s a few tips to help you get to your savings goal.
Purchasing a home is a significant milestone, one that requires careful financial planning and disciplined saving. In this guide, we discuss the practical strategies and tips that can help start you on the journey to saving a house deposit.
Set a SMART goal
If you're someone who likes to set goals, creating a SMART goal to guide your savings plan is a great idea. SMART stands for Specific, Measurable, Achievable, Realistic, and Timely. What it does is allow you to set a goal to save for a house deposit, for example your SMART goal could be to save up for a 20% house deposit on a property valued at $650,000 within five years. Review your insurance policies and save
While insurance is an essential expense that you hope to never use, it's important to regularly review your policies to ensure they still meet your needs. Don't just set and forget your insurance; take the time to check the market and look for multi-policy and loyalty discounts that you may be missing out on.
When reviewing your policies, consider the following:
Health Insurance
Check if your health insurance matches your current life stage. Are you paying for extras that you don't use or no longer require, for example, obstetrics?
Personal Insurance
Apply the same thinking to life insurance, income protection, permanent disability and pet insurance – whatever is relevant to you.
Vehicle Insurance
If your insurance company calculates your premiums based on factors such as vehicle usage, daily commute distance, and storage location, providing accurate estimates could potentially save you on premium costs. For example, if you've made security upgrades to your vehicle storage or your daily commute has shortened, it's worth updating your insurance company to ensure you're not overpaying for cover.
Consider shopping around for different policies and providers to ensure you're getting the best deal. Look for any discounts you may be eligible for, such as multi-vehicle or safe driver discounts.
Home & Contents Insurance
As a homeowner, it's important to have building insurance (this is required by lenders). If you've made significant improvements, renovations, or extensions to your home, you’ll need to update your policy to ensure you have adequate coverage. Likewise with contents insurance. Do a stocktake of your assets and ensure you're not underinsured. If you have high-value items such as jewelry or artwork, it's worth checking if you need specified or portable contents insurance.
Accidental damage insurance is optional, but it's worth understanding what's covered and the claim caps in case of unexpected events. Review your policy to see if accidental damage insurance is included or if it's worth adding to your coverage.
Consider shopping around for different policies and providers to ensure you're getting the best deal. Look for any discounts you may be eligible for, such as multi-policy or loyalty discounts.
Landlords Insurance
If you're a landlord, it's important to regularly review your insurance policies to ensure you're adequately covered. If you've replaced appliances or made improvements to your rental property, you’ll need to update your policy to reflect these changes.
If you've been with the same insurer for a while, consider shopping around for different policies and providers to ensure you're getting the best deal. Look for any discounts you may be eligible for, such as multi-property or long-term lease discounts. It's also worth considering landlord insurance, which can provide additional coverage for events such as tenant damage or loss of rental income.
Need help deciding which/how much insurance is right for you?
There are plenty of comparison sites popping up in the market that could help you whittle down the choices, however most companies pay to be listed on these sites so remember to check what filters have been applied so you can see all the offers in the market. Call around for quotes and compare your options.
Find out exactly what you’re paying in bank account(s) fee
Do you know what you are paying in monthly fees to access your everyday account? If not, it’s a good idea to check. Keep in mind that there are plenty of options that waive monthly fees if you deposit a minimum amount.
Also, think about consolidating your accounts or open a linked savings account so you can auto-transfer a portion of your pay and reach your SMART goal.
Get your credit card(s) in order Credit card interest rates and annual fees can be extremely high. Get onto comparison sites to find out if there’s a better deal than the one you’re currently getting.
If you’re about to apply for a home loan or similar, it might be time to pay down your cards, lower your credit limit or close the account altogether. Your credit limit could affect your borrowing capacity and your ability to repay the loan. Remember that Buy Now Pay Later (BNPL) facilities (such as AfterPay) can impact how much you can borrow when you apply for a home or investment loan.
Buy Now Pay Later BNPL facilities are treated no differently than credit facilities, so try to get your BNPL repayments down wherever possible. Try making early repayments (if you can afford them) and refrain from adding to your repayment commitments before you apply for a home loan. This will help to lower your overall expenses and improve your approval chances. Think you might be paying too much for utilities? Give your provider a call to see if they’ve got any deals on – just make sure you know what you’re getting into as some providers require you to be locked-in for a period.
It’s also a good idea to combine your utilities. If you have a mobile phone bill with one company, and your internet with another, combining the two with one provider could save you money. Providers are bundling and packaging up some good phone, internet and entertainment deals, so it can pay to research.
Cut unnecessary costs If you're still paying for subscriptions you're not using, it's time to cancel them. This includes online courses, meditation apps, magazines, and newspaper subscriptions.
Take a look at your entertainment subscriptions, such as Spotify, Apple Music, Netflix, Stan, Amazon Prime, Foxtel, and Kayo. Consider canceling the ones you're not using or see if you can save money by signing up for a family account.
Additionally, review the games and apps you've been downloading on your devices. Delete your credit card details to make it more challenging to make impulse purchases. This way, you'll have to go through the process of entering your details every time you want to buy a game or app, which may prevent you from making unnecessary purchases.
Now it’s time to go out and start saving. Want to know more about what you’re working towards? Read about Qantas Money Home Loans here.
* You have to be a Qantas Frequent Flyer member to apply for the Qantas Home Loan. This information has been prepared without considering your objectives, financial situation or needs. You should consider your circumstances before acting on this information.