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Saving the deposit to buy a property can takes years. But with financial discipline and some creative tips you can build up a deposit for your home loan faster than you think.
Here's what you need to do to.
The typical house deposit is 20% of the property price. But many lenders will accept a deposit as low as 10% or even 5%.
Just be aware that a smaller deposit means borrowing more money and therefore paying more interest over time. Also, when your deposit is less than 20% you may need to pay lenders mortgage insurance (LMI). This can add thousands to your costs.
There are two parts to a property purchase:
Here's an example:
In this example, buying a $500,000 property means a 20% deposit of $100,000. But if you went for a 10% deposit you'd only need to save $50,000 (but you'd have to pay LMI costs).
In short, your deposit size really depends on how much you can afford to borrow and how much you can realistically save.
Research areas you'd like to live in and look properties for sale to get some idea of what's on the market. Then look at your income and expenses. You're probably paying rent currently, so use a loan repayment calculator and see what mortgage repayments would look like compared to your rent.
Read more on how much you should save for your deposit
Beyond your deposit (and possibly LMI) there's one more big upfront cost to watch out for: stamp duty. If you're a first home buyer you might get a discount or exemption on stamp duty, depending on where you live.
You can read more on this topic in our state-by-state stamp duty guide, or enter your details into this stamp duty calculator.
Once you have your deposit goal in mind it's time to get serious about saving. Here are some basic, essential tips:
Read our complete money saving guide here
If you have an asset you could sell, like a car you don't need or some shares, you might consider selling them and putting the money towards your deposit.
Beyond saving more and spending less, there are some ways you can scrape a deposit together you might never have considered.
Several of the tips below require family wealth. We understand that this can be a very helpful resource for some borrowers and completely impossible for others. But while not all of the tips below will apply to all borrowers, even just one could be a big help:
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