3 steps on how to save a deposit for a property
24 Jun 2019 - Investment Tips
Buying your first home or investment property seems like an impossible task. How do others do it? Where do you start? What can someone do to make property ownership a reality? For more than ten years, the Nuvaq team has been helping clients buy their first home or investment property on the Gold Coast. We have been asked many times how to save a deposit for a property by young people. Here are 3 steps on how to save a deposit for a property and you will be surprised by how effective #3 is.
Step 1: Savings
Set aside a portion of your wages weekly into a savings account. You will be surprised how much you will save at the end of the year by practising this step diligently.
Say if you put aside $100 per week, that is equivalent to $5,200 by the end of the year.
The secret is in setting the amount aside as soon as you receive your wages. The savings account that you put aside this amount to should not be used as discretionary spending, i.e. this is not an account for you to use to buy an item that you really, really like. This is an account that you must not use for anything else but your property deposit.
Consider as well some banks have savings account that pays slightly higher interest rate than normal checking account. Put your weekly saved funds into this account and watch your deposit grow.
Step 2: Save on Spending
There are so many creative ways to save on spending as a must do on how to save a deposit for a property. Come up with ideas on how to save on your weekly spending such as making your own coffee several times a week instead of the daily coffee to go that you buy at cafes.
Consider staying in for several home cooked meals instead of eating out weekly – search for simple recipes that you can make to keep a healthy lifestyle at the same time.
Go out for a run on the beach or make use of the free gym equipment at the beach instead of a gym subscription membership.
Consider reading a book or hiring a book from the library instead of cable TV subscription. The more you can save, the sooner you will reach your goal of a saving for a deposit for a property.
Step 3: Ask for help
Dare we say it? Ask your parents for a helping hand! Often, young people did not think the parents will help them out with the deposit. You will never know if you don’t ask.
We have had many of our clients say that their parents have contributed to their deposit for a property.
Try this – you can always ask your parents to match your savings. Parents like to see their children strive diligently towards a goal and often find it encouraging to match their children’s savings. Ask, and you will find out, but first, show your commitment by sharing with them your goals and what you have done so far to get there.
How much have we saved?
How to save a deposit for a property is not rocket science, it is pure discipline. Assuming you have diligently followed step 1 and saved for 3 years at $100 per week, this means you have saved $15,600.
Step 1 Goal: $15,600 saved
Assuming you have diligently followed step 2 and saved on two coffees per week, that’s equivalent to approximately $100 per month in coffee savings that you set aside as well. That is $1,200 per year or $3600 for 3 years.
Step 2 Goal: $3,600 saved
By the end of 3 years, you will have saved $15,600 plus $3,600 totalling $19,200.
Now three years ago, you made a deal with your parents to match half your savings, which means they will contribute $9,600 to your deposit.
Step 3 Goal: $9,600 matched by parents
Three years later, you will have a total of $28,800!
Guess what? This is equivalent to 5% deposit on a $400,000 property and the balance of savings will go towards loan borrowings and mortgage insurance costs.
Compare now to your circumstance 3 years ago. How to save a deposit for a property is achievable and not impossible! Just follow the simple 3 steps on how to save a deposit for a property.
Want to find out more? Contact a team member from Nuvaq for more information on how to save a deposit for a property.