How to set a weekly budget to save for a deposit for your new home

Date Wednesday, 16 December 2015 12:00 AM

Putting a deposit on your new home is very exciting, however the saving journey may require some careful budgeting. With proper planning though, you can save money regardless of income, and indeed here at G.J. Gardner Homes we can provide a range of home designs to suit any budget.

The following two steps will help you save more efficiently for your deposit.

Step one: Set your goal

Before saving any money, you will need a firm goal in mind. Research the property market thoroughly to decide where you would like to build a new home. This will yield an estimated savings goal that you can achieve. Westpac Banking Corporation suggests striving for between a 5 to 20 per cent deposit.

Do your research to work out how much you need to save for a deposit.Do your research to work out how much you need to save for a deposit.

The Australian Securities and Investment Commission also recommends working out your loan to value ratio (LVR) to decide if you will require lenders mortgage insurance, which is an additional cost. To calculate this, divide the amount of money you require for a loan (therefore house value minus your deposit) by the total appraised value of your property, then multiply the number by 100. This will give you a percentage. Any ratio over 80 per cent will likely require insurance.

Two ways you can trim unnecessary expenses is through paying off existing debts and cutting down on luxuries.

Step two: Trim the fat

Two ways you can trim unnecessary expenses is through paying off existing debts and cutting down on luxuries.

The former may seem counterproductive, however consider the interest you have to pay and how much of your income goes towards these debts each pay cycle. The Commonwealth Bank of Australia states debt may also affect your future home loan.

As for your luxuries, it might seem difficult to cut down buying lunch every work day, however small amounts add up in the long run. For example lunch can cost up to $10 a day, which can add up to $50 a week or $2,600 a year! Make your own lunch and put that $10 a day into a deposit savings account. Assess all of your spending habits and you will be surprised where you can cut costs and save money towards your new home.

Follow these two steps and you will be well on your way towards buying a new home. Some people find it helps to put aside a set amount each week and transfer it to a high-interest savings account. The amount you are able to save each week for your deposit will be determined by your own personal situation.

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