Saving for a home loan can feel like an overwhelming task, and it often seems like your goal is just out of reach. We’ve put together our recommendations to make sure your finances are in order and to help you set a savings plan to make sure you hit your home loan goals.
Prepare a budget and stick to it
Like to pick up a coffee on the way to work? Or maybe the occasional ‘treat’ to get you through the day? Or you’re simply too tempted to buy that one extra thing when you hit the shops? Whatever your indulgence, these expenses whilst they may seem small all add up and will ultimately delay your dream of owning your own home. The best place to start is to calculate your expenses, then set yourself a budget and make sure you stick to it – you’ll find the more you save, the greater the incentive you have to keep going.
Hot tip: Avoid electronic purchases – instead, withdraw cash so you know how much you’re spending weekly.
Open a separate bank account
Open a ‘high interest’ savings account and place your home deposit savings in this account. By removing the temptation of being able to see your home loan savings in your everyday transaction account, it means you can avoid using those ‘extra’ funds just because you can. Not to mention the added benefit of earning a minimum of 2% interest on your total savings just by having money in an account – how easy is that?
Hot tip: Set up a direct transfer into your home loan savings for every pay day and make top-ups whenever possible.
Pay off any credit card debts, personal loans or purchase agreements
When you apply for a home loan, the bank or lending institution will determine your ‘borrowing power’ – this is calculated based on your income, financial commitments and loan details. with the best approach is to start with more income and savings than debts and expenses, so make sure you do everything you can to drop down any debts before you submit your loan application, to ensure you have maximum power.
Hot tip: Consolidate your debts so you only need to manage one repayment and try to always pay more than the minimum repayment amount.
Look out for deals
You’ve already calculated your expenses, so now you can shop around for the best home loan deal! Everyone from supermarkets to utilities providers have competition, so you can be sure many lenders will offer you something better just to gain you as a customer. Taking the time to do your research and find the best product for you can save you hundreds or even thousands in the long run.
Hot tip: With service providers, if you can’t find a deal online, then give them a call and ask what they can do for you.
