7 Ways to Save for a New Home While Renting
Many people dream of owning their own home. It is a mark of success in life. More importantly it provides security and can help you to budget for retirement.
Unfortunately, the days of 100% or even 105% loans are now gone. The best you can hope for now is a low deposit loan. This is likely to be for 95% of your loan amount.
The average house price in Australia now ranges from $345,000 to in excess of $800,000; depending on where you live. Even at the bottom end of this scale you’re going to need a deposit of at least $20,000.
Your best bet is to see a finance broker as early as possible to discover what loans you should qualify for. You will then know how much you need to save.
Here are some ideas on how to save even when renting:
- Rent Your Spare Room
An excellent way of increasing your income is to rent a spare room; assuming you have one. The additional funds can be placed in a special account for your mortgage down payment.
Even at just $50 a week you can save $2600 a year! Just be sure to allow for any increase in cost of utilities when calculating the rent amount.
Another option is to downsize your apartment. If you have a spare room but don’t use it then you could go to a smaller apartment and save a substantial amount in rent.
Of course, you’ll need to save the money you save not just spend more.
- Create A Budget
A budget is essential to ensure you know how much you can spend on everything each month without damaging your savings efforts.
It’s important to be realistic when creating your budget. There is no point allowing $20 per week for groceries when you know you’ll never be able to stick to it. You need to enjoy life now as well!
- Cash Only
In a digital world it can seem bizarre to move back to cash. However, if you withdraw your allowance every week in cash you will always know what you have available to spend.
There is no chance of damaging your saving efforts this way!
- Second Job
If you have the tie then you can get a second job. The funds from this will need to be saved to ensure you are justifying working harder.
This can also be a great way to make new friends and build contacts.
- Set Up A Savings Account
It doesn’t matter how hard you try to save your deposit. You’ll find it much harder if you don’t set up a savings account.
Doing this allows you to put the funds somewhere; you won’t be able to easily touch them but as they grow you’ll be inspired to add more.
- Revaluate Your Commute
Finally, it is important to look at your daily commute. You might be able to downsize and walk instead of driving to work.
Alternatively you might be able to walk from your current home. Whatever you save on transport must be saved.
The key to obtaining your deposit is not in implementing these changes; it is in ensuring that the additional funds are saved. This will give you the deposit you need much faster than you realize.