Saving for a house? 6 tips to improve your strategy
No one said saving for a house was easy - but approaching it with the right tools and strategy might help
Sponsored by ANZ Plus - smart, secure and designed to build better financial habits, ANZ Plus can help you take your financial wellbeing to the next level.
Saving for a deposit for a home loan is one of the biggest barriers for first home buyers. As house prices have risen the deposit hurdle only gets bigger.
If you've done your research you'll also know that the deposit isn't the only thing you have to worry about. There are other charges to be aware of, like loan application fees, conveyancing fees and government charges. You might also need to pay lender's mortgage insurance (LMI) if you want to get a loan with a deposit smaller than 20%.
In short, the cost of buying a home adds up and that requires a lot of saving.
Whether you've been trying to save for a long time or you're right at the start of your saving journey, there are a few things you can do to improve your strategy and reach your goal sooner.
1. Make use of apps and tools
Being set up with the right tools can really help you focus on what you're saving for. Simply having a savings account is often not enough, particularly when you're saving for more than one thing. It can be easy to lose track of how much you've saved.
Presumably, saving for a house deposit isn't the only savings goal you have. You'll also need cash set aside for emergencies as well as budgets for other areas of your life.
Thankfully ANZ has recently launched its new banking service ANZ Plus, which is packed with features designed to help you build better financial habits. Customers of ANZ Plus get an everyday account and a linked savings account. This savings account lets you set and track up to 99 different savings goals. Additionally, all of these goals achieve a great interest rate when the balance is under $250,000.
With the ANZ Plus app and automatic spend categorisation, you can have control and visibility over your savings and spending, meaning you stay laser-focused on what you're saving for.
For each savings goal, you can set deadlines and see how much you need to save each week in order to reach your goal by that time.
And if you need them, you can chat securely in the app with ANZ Plus coaches who are available to provide extra support.
2. Commit to putting a specific figure towards your goal
Once you've got your tools set up to make sure you're maximising your savings efforts, it's important to commit to stashing away a specific amount each month.
Saving on an ad-hoc basis or simply transferring what you have left over at the end of the paycheck is not a strong strategy.
Sit down and work out your budget. There will be a lot you need to continue paying for, but work out how much you can realistically save each month. Even if your pay cycle is weekly or fortnightly, working out by month allows you to focus on a more consistent number, as some weeks you may not pay any bills but others you may pay several.
Once you have that number you can save, you might decide to put a smaller percentage into your emergency savings or other savings goals, but commit to a solid figure each month for your deposit. And stretch yourself. Saving for a deposit isn't easy work, so it may mean being strict on some areas of spending.
3. Pick a savings account with good interest rates
There's been a lot of fear about rising interest rates, but one of the positives of rising rates is the impact it has on your savings! Interest rates have been rising, but you should still shop around to make sure you're getting the best interest rate for your savings account.
One of the other benefits of banking with ANZ Plus is the competitive interest rate you'll receive. You get a great interest rate across all of your goals in your ANZ Save if the balance is less than $250,000.
4. Use an expert - financial planner/mortgage broker
You don't have to do this alone. There are experts out there who can help you sort through your finances such as financial planners and mortgage brokers.
For instance, speaking to a mortgage broker will help you work out the property you could realistically pay for and subsequently what sized deposit you would need to save for. Having that specific figure in mind is really key in your savings strategy.
Financial planners can also work with you to look at your expenses and see where you may be able to cut back.
5. Tackle your expenses
A lot of the essential bills that we pay for are often things we set and forget. How long has it been since you set up your internet plan or your electricity provider?
If you haven't taken the time to compare expenses like this, it's crucial to do it. You're likely missing out on great savings by sticking with what you're used to.
There may also be other monthly expenses that you could cut back on, like streaming services or other subscriptions. Consider whether you can go without them for a time and put that extra money towards the deposit of your house.
If you pay for several streaming services, perhaps you could consider paying for one each month and rotating through them? Going through your expenses and making a real commitment to putting more of your disposable income towards your home loan deposit will make more of a difference than you realise.
6. Consider paying off your existing debts
It might feel painful to use your savings to pay off any existing debts you already owe, but trying to pay off other loans at the same time as saving for your deposit could make it hard.
Not only could it muddy the waters of where your income should go, but you could end up paying more money on the interest you are racking up. That's more money that could be accruing interest in your savings account.
Take a look at what debts you have and your own circumstances to see whether this is the right step for you.
Paying off all your debts will also improve your borrowing power when it comes to applying for your loan!
Sponsored by ANZ Plus - smart, secure and designed to build better financial habits, ANZ Plus can help you take your financial wellbeing to the next level.
