Most first time home buyers will find themselves needing to approach a bank (or six) with the intention of applying for a mortgage. This inevitable task can be terrifying, especially with the intimidating nature of banks getting more and more severe as lending policies become stricter and stricter, but there might be some of you out there that are still trying to overcome the first hurdle; saving for your home loan deposit.
There are plenty of mortgage brokers out there – many of which can help to maximize your chances of being approved on a loan, but if you don’t have the cash up front to cover the percentage demanded by your chosen lender, the chances are that your application won’t even be considered. With that in mind, here are 5 effective ways to save for a home loan deposit that won’t leave you penniless!
Open a Savings Account
If you don’t already have a savings account, now might be the time to consider opening one. These handy little accounts can be a good way to put any extra cash that you make aside – and as you’ll undoubtedly already have an active bank account to pay your bills and withdraw cash as and when it’s needed, you’ll be amazed at how much you could save by putting away just small increments every month. If you made a point of saving $200 a month, you’d have an additional $2400 a year – with interest.
Put a Little Extra Aside Each Month
If you’re one of those people that can’t help but put your entire pay check to good use – then you might want to reconsider what it is that you’re spending your hard earned cash on. If you find yourself with as little as $50 extra each month, why not put it aside? You could keep it in your regular account or store it in cash – as long as you have it available for when you’re ready to apply for your loan (and to be used as a deposit).
Reconsider Your Expenses
Let’s imagine that you have a monthly subscription to a magazine, a gym membership that you barely use, or a payment plan set up when the cash could be better spent elsewhere. These activities might seem small by nature, but over the months they can certainly start to add up. Just imagine how much money you might have wasted already by failing to cancel that gym membership for the past 2 years. We could be talking thousands here, so why not re-evaluate your expenses, and see if you’re left with a little extra in your pocket?
High Interest Accounts Can Last For Years
If you don’t mind waiting to apply for your mortgage, then you might be in a position to open a high interest account today, and then leave it to gather interest over the course of the next 5, 10, or even 15 years. There’s really no obligation to get onto the property ladder right now, and if you have the time (and youth on your side), why not do the responsible thing and have a high interest savings account opened in your name – and just add to it as and when you have the cash?
Opt for a Lower Deposit
Another very effective way to save money for your mortgage is by reducing the amount of money that you’ll need to save in the first place. Some banks require 25% deposits, but others are happy with 10, and even 5% instead. If you get to know the minimum that your potential lenders might require you could always go for a lower deposit from the offset, and then use your credit score to reassure your bank that you could be an ideal borrower.
Categories: Real Estate