How to save a house deposit while renting

Stuck in the rent trap? By setting a realistic savings target, trimming your costs and understanding your mortgage options you can save a house deposit while renting.

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Saving a house deposit while paying rent requires budgeting, hard work and a little bit of financial knowledge. But it can be done.

Work out how much you need to buy a house

This consists of two question: how much are you willing to spend on a property, and how big will your deposit be?

Property price

Do some research on where you want to buy, what sort of property you're interested in, and be realistic about how much you can afford to pay in monthly home loan repayments. This will help you determine your deposit size and give you a realistic saving target.

Deposit size

Once you have a rough idea of the amount you want to spend on a property you can determine your deposit size. For example, if you wanted to purchase a $750,000 property, the standard 20% deposit would equal $150,000.

But many lenders offer low deposit mortgage options for borrowers who have saved deposits of 10 or 5%. The only downside is you will need to pay lenders mortgage insurance when borrowing more than 80% of a property's value.

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.

Create a budget strategy

Step back and take the time to understand your finances and spending habits. Do the following:

  • Check your credit score so you can see if you any outstanding debts or other credit problems. This helps you work out whether there is room to consolidate or eliminate any debts, such as credit cards or personal loans.
  • 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.)
  • 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. 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 your expenses

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 a roommate, move to a cheaper suburb or consider downsizing to a smaller or older place. 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.
  2. Demand a better deal. 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. And if they won't offer you a better deal, compare and switch to a cheaper option.
  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.

Open a 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.

Get a 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

$
years
Name Product Interest Rate (p.a.) Comp. Rate (p.a.) Fees Monthly Payment

HSBC Home Value Loan P&IHome≥ 30% Deposit

HSBC Home Value Loan
1.97%
1.98%
  • App: $0
  • Ongoing: $0 p.a.
$554
$3,288 refinance cashback offer
This competitive variable rate loan is available for borrowers with 30% deposits. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

UBank UHomeLoan Fixed P&IHome 1Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
1.79%
2.18%
  • App: $0
  • Ongoing: $0 p.a.
$540
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
1.85%
2.21%
  • App: $0
  • Ongoing: $0 p.a.
$545
Get a low discounted variable rate loan. Requires a 20% deposit. Get your loan processed fast and settle within 30 days.

Macquarie Bank Basic Home Loan P&IHome≥ 40% Deposit

Macquarie Bank Basic Home Loan
2.14%
2.14%
  • App: $0
  • Ongoing: $0 p.a.
$567
Apply for the Macquarie Bank Basic Home Loan - LVR ≤ 60% (Owner Occupier, P&I) and get a low variable interest rate, plus no application and ongoing fees. Requires a 40% deposit.

Athena Variable Home Loan P&IHome≥ 40% Deposit

Athena Variable Home  Loan
1.89%
1.89%
  • App: $0
  • Ongoing: $0 p.a.
$548
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.

IMB Fixed Rate Home Loan P&IHome 2Y Fixed≥ 20% Deposit

IMB Fixed Rate Home Loan
2.07%
2.65%
  • App: $449
  • Ongoing: $6 per month
$561
A 2 years fixed with the competitive features.

Nano Variable Home Loans P&IHome≥ 25% Deposit Refi Only

Nano Variable Home Loans
1.99%
1.99%
  • App: $0
  • Ongoing: $0 p.a.
$555
Competitive rate with zero fees, fast approval and a 100% free offset account. Refinance only, 25% deposit required.

Well Home Loans Equity Plus P&IHome≥ 40% Deposit

Well Home Loans Equity Plus
1.82%
1.85%
  • App: $250
  • Ongoing: $0 p.a.
$543
Borrowers with 40% deposits or equity can get this low variable rate loan. 100% offset account included.

OneTwo Variable Rate Home Loan P&IHome≥ 20% Deposit Refi Only

OneTwo Variable Rate Home Loan
1.99%
1.89%
  • App: $0
  • Ongoing: $0 per month
$555
A low variable rate loan for owner-occupier refinancers living in metro NSW/VIC. Get rate discounts as you repay the loan.

86 400 Own Home Loan Fixed P&IHome 1Y Fixed≥ 20% Deposit

86 400 Own Home Loan Fixed
1.94%
2.55%
  • App: $250
  • Ongoing: $250 p.a.
$552
Fix to this very competitive rate for one year. This loan requires a 20% deposit.

Virgin Money Reward Me Fixed Rate Home Loan P&IHome 2Y Fixed≥ 20% Deposit

Virgin Money Reward Me Fixed Rate Home Loan
2.48%
2.37%
  • App: $300
  • Ongoing: $10 per month
$593
$3,000 refinance cashback.
Buy your home and lock in a low rate for the first two years. Get a $3,000 cashback when you switch to Virgin Money with a loan amount of $300,000 or more with an LVR up to 80%. You must apply by 31 January 2022 and settle by 29 April 2022.

Bluestone Prime Home Loan P&IHome≥ 30% Deposit

Bluestone Prime Home Loan
2.23%
2.25%
  • App: $0
  • Ongoing: $0 p.a.
$573
Bluestone's Prime is a competitive variable rate home loan for borrowers with 30% deposits.

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
1.99%
2.47%
  • App: $0
  • Ongoing: $0 p.a.
$555
Home buyers can get a very low discounted variable rate for the first year. Requires a 20% deposit. Add an offset sub-account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.

ME Flexible Home Loan Fixed with Members Package P&IHome 2Y Fixed≥ 20% Deposit

ME Flexible Home Loan Fixed with Members Package
2.29%
3%
  • App: $0
  • Ongoing: $395 p.a.
$578
$3,000 cashback when refinancing a loan of $250,000 or more. Other conditions apply. Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.

Well Home Loans Balanced Fixed Home Loan P&IHome 1Y Fixed≥ 10% Deposit

Well Home Loans Balanced Fixed Home Loan
1.99%
1.90%
  • App: $250
  • Ongoing: $0 p.a.
$555
Owner occupiers can get a sharp fixed rate for the first year, plus an offset account. Available with a 10% deposit.

UBank UHomeLoan Fixed P&IHome 3Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.49%
2.29%
  • App: $0
  • Ongoing: $0 p.a.
$594
A competitive fixed rate loan with no ongoing fees. Requires a 20% deposit.

Nano Variable Home Loans P&IInvestment≥ 25% Deposit Refi Only

Nano Variable Home Loans
2.29%
2.29%
  • App: $0
  • Ongoing: $0 p.a.
$578
Investors can refinance this no-fee variable rate loan. You will need a 25% deposit. Fast online approval.

Macquarie Bank Basic Fixed Home Loan P&IHome 3Y Fixed≥ 30% Deposit

Macquarie Bank Basic Fixed Home Loan
3.09%
2.41%
  • App: $0
  • Ongoing: $0 p.a.
$641
Get a low interest rate and a mortgage with flexible, basic features. No application or ongoing fees. Requires a 30% deposit. Refinancers can switch with a convenient digital application.

Well Home Loans Balanced Fixed Home Loan P&IHome 2Y Fixed≥ 10% Deposit

Well Home Loans Balanced Fixed Home Loan
2.27%
1.95%
  • App: $250
  • Ongoing: $0 p.a.
$577
A low fixed mortgage with an optional 100% offset account. Not available for construction purposes.

Well Home Loans Balanced Variable P&IHome≥ 20% Deposit

Well Home Loans Balanced Variable
1.85%
1.88%
  • App: $250
  • Ongoing: $0 p.a.
$545
A very low interest rate for home buyers with 20% deposits saved. Add an offset account for a small fee.
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