How you can save for a property while renting

It’s a hurdle that many Australians face: how to save for a deposit while renting. It may seem out of reach, but it’s possible. Here’s our advice on how you can meet your rental payments and set aside surplus cash for a home loan deposit.

How to save for a property while rentingAs rent and utility bills roll in like clockwork, saving for a home loan deposit may seem unattainable, but there are ways that you can avoid dipping into your savings unnecessarily.

If you plan to complete a 20% deposit, you’ll most likely need to save tens of thousands of dollars while still keeping up with your daily expenses (if you want to dodge paying lenders mortgage insurance, or LMI). However, every inch of savings will help you get closer to your homeownership goal, and persistence certainly pays off.

There are various quick fixes to increasing your savings, such as selling assets or unwanted items, or even having a go at house-sitting, but saving for a home loan deposit requires continued effort and a long-term mindset.

Here’s some advice about how you can build up your deposit more efficiently so you can get into the property market sooner.

Nikki rents in Earlwood while saving for home deposit

How to save for a property while renting case studyNikki is a 26-year-old professional who rents in Sydney and is saving for a 20% home loan deposit.

Although Nikki knew it would be difficult to save for a deposit while renting, she made sure she found a place where she could truly afford to rent. After doing some research, she found a rental property in Earlwood – just outside Marrickville and Newtown – where the rent was slightly cheaper.

With a minimum monthly deposit of $300 into a high interest savings account, Nikki worked out that she would have saved up a total of $3,600 (plus interest) in the first year. Nikki makes a conscious effort to transfer her salary into her high interest savings account as soon as it’s deposited into her regular savings account.

When setting herself a budget, Nikki factored in the basic necessities, including rent, petrol, phone and food expenses. She gave herself a small spending allowance and ensured that the rest would go towards her savings. She planned ahead for special occasions, such as birthdays, where she would allow herself a bit more money to spend.

Nikki also cooked her own meals at home as often as possible, and she took on extra freelance photography work for local businesses on the weekend. She found that the extra $300-$400 a month went a long way in helping her achieve her savings goal.

Create a budget strategy

Step back and take the time to understand your finances and spending habits. Request a copy of your credit file so you can review any debts that you have listed against your name. This may help you work out whether there is room to consolidate or eliminate any debts, such as credit cards or personal loans.

You then need to identify your living expenses such as utility bills, transport and food to see whether you can minimise any of these costs. For instance, if you’ve been spending $80 on petrol every week, think about taking public transport or cycling to work. (It’s better for the environment too.)

Next, you need to think about unnecessary expenses that you could forego such as coffee, gym memberships or alcohol. This is where you can potentially save a lot of money. Instead of buying a daily coffee, have one at home, and make your own meals more often.

From here, you should work out your budget plan. Work closely with an accountant so you can understand how much you can set aside each month to go towards your deposit.

Budgeting apps for your wearable technology can help you monitor where your money is going.

As a general guide (and depending on your lifestyle needs), you should allocate around 50% of your income on living expenses (such as rent, transport, insurance and utilities), 25% of your income on entertainment (such as dining out, movies and concerts) and roughly 25% should go towards your savings. Around 15% of the amount you’re saving should go directly towards your deposit fund.

Trim expenses (again)

Find more ways to trim your debt; this should be a continuous habit. If you’re still a member of an expensive gym, it might be time to move to a smaller gym. If you’re paying $85 per month on a phone plan, consider downgrading to a cheaper plan.

1. Minimise rent

Find ways to lower your monthly rent. Find a roommate, move to a more affordable location or consider downsizing to a smaller or older place. For example, if you’re currently paying $300 per week in an inner-city location, consider moving to an outer suburb location where you might pay just $200 per week.

A $100 weekly saving may not seem like much, but this could add over $5,000 to your savings account each year, which could fast-track your way into the real estate market.

Alternatively, consider negotiating your rent with your landlord. If you’ve been a reliable and long-term tenant, your landlord may want to hold on to you, as this would save them the hassle and cost of advertising for a new tenant.

2. Don’t be complacent

You can also try negotiating with your utility and service providers. Approach your electricity, gas and internet providers and ask for a better deal. You may be surprised to find out just how much providers want to retain loyal customers.

3. Be efficient

Another way to lower your expenses is to be conscious about your energy use. Turn off the air conditioner or heater when you’re not in the room, and switch to energy-efficient lighting to lower your monthly utility bills.

Work out a savings target

Once you’ve finalised your budget plan and worked out how you can lower your ongoing expenses, the next step is to determine how much you need to save for a deposit. Depending on your timeframe and how much you’ve already saved up, most homeowners-to-be try to save up 20% of the property purchase price to avoid paying an insurance premium (for a full documentation home loan).

For instance, if you wanted to purchase a $750,000 property, you’d need to come up with $150,000 to complete the required deposit. Speak to an accountant and mortgage broker during this stage so they can help you understand your borrowing power, which can dictate your savings goal.

Be proactive (and creative) about making extra cash

There are several ways that you can boost your household income without taking a second job. For example, you could rent out a spare bedroom or do a little house-sitting.

Use your skills outside of your workplace to get some extra cash. If you’re an accountant, volunteer to help people lodge their tax returns. If you’re a graphic designer, consider doing some freelance projects on the side.

Dedicated savings account

Open a high interest account that is dedicated to your deposit savings. You can separate your deposit funds from your other accounts and keep track of how much interest you're earning each month. When it comes to applying for a home loan, making regular deposits into a high interest savings account will demonstrate to the lender that you have good financial discipline.

Co-borrower or guarantor

If you can invest in property with a close family member or friend, saving for a deposit becomes much easier, as the amount you need is halved. However, there are other factors to consider before you purchase property with someone else, so make sure you do your homework.

Finding a guarantor for a home loan is another way to relieve some of the pressure of saving up for a home, which can also help you get into the property market sooner.

Compare your mortgage options now

Rates last updated August 20th, 2018
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
$0 p.a.
Competitive interest rate and limited fees
A simple mortgage with a competitive interest rate and no application or monthly fees. Borrow up to $2 million from a convenient online lender.
$0 p.a.
Special discounted interest rate
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
$0 p.a.
Get approved faster with a speedy online application
Low interest rate and limited fees. Add a 100% offset account for $10 a month.
$10 monthly ($120 p.a.)
Earn Velocity Frequent Flyer Points with this mortgage to spend on flights and more (subject to eligibility requirements). Redraw facility available on this variable rate home loan. Competitive interest rate.
$395 p.a.
Save on interest with a 100% offset account
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
$0 p.a.
Requires a 30% deposit
Enjoy all the benefits of the Basic Home Loan and take advantage of an offset account.
$395 p.a.
Save on interest with a 100% offset account
Loans over $150k get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.
$10 monthly ($120 p.a.)
Earn thousands of Velocity Frequent Flyer Points on your mortgage (subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
$0 p.a.
This sharp rate product requires a 30% deposit
Pay no application or ongoing fees and get a flexible loan with the ability to split up to 6 times.
$0 p.a.
Low fee online mortgage
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.

Compare up to 4 providers

Aussie Home Loans Logo

Enter your details below to receive an obligation-free quote from an Aussie home loans expert today respects your privacy

Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

Credit services for Aussie Select, Aussie IQ and Aussie Optimizer products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 ("Aussie"), and its appointed credit representatives. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133 Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Optimizer products is provided by Perpetual Limited ABN 86 000 431 827 (Lender). Credit for Aussie IQ is provided by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502. Home loans issued by the Lender are serviced by Macquarie Securitisation Limited ABN 16 003 297 336, Australian Credit Licence 237863 (MSL).

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2018 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

By submitting this form, you agree to the privacy policy and the Aussie privacy policy.

Aussie Home Loans is both a lender and a mortgage broker, and offers a range of services.

  • FREE Suburb and Property Report with every appointment.
  • Access 3,000+ loans from over 20 lenders.
  • Get expert help with your loan application, including paperwork and eligibility.
  • Over 1000 brokers who are able to help you in your local area.

Aussie Home Loans Lender Logos

The Adviser’s number 1 placed mortgage broker 5 years running (2013-2017)

Images: Shutterstock

Belinda Punshon

Belinda is a journalist here at Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

Was this content helpful to you? No  Yes

Related Posts

Home Loan Offers

Important Information*
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate. Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64% p.a.
comp rate of 3.66% p.a.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤90% ($150K+ Owner Occupier)

Loans over $150k get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.

Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150k+ Owner Occupier, P&I) Discount 1

New borrowers or refinancers can get a discounted rate with this package loan. Bonus $1,500 cashback for refinancers.

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.
Ask a question
Go to site