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Saving for a home deposit

Saving For A Home Deposit

With property prices rapidly increasing over the past few years, many people wonder whether it is still worth saving for a home deposit.

For some, as property values outstrip wages growth, it can seem like an exercise in futility! Why bother!

However even under such a scenario – we believe it is still possible to save a deposit for a home and get into the market.

That said; it will also likely require some sacrifices and adjustments in lifestyle to accumulate the needed deposit.

Saving for a home deposit – it doesn’t happen by magic!

One thing is certain, accumulating a home deposit won’t happen by magic!

The reality being, unless you try, you may never get into the market – which could have potentially serious longer term consequences!

Saving for a Home Deposit – work out what you can afford to borrow

The starting point when saving for a home deposit, is to work out, based on your current income, what you can afford to borrow.

This will determine the type of property you can afford to purchase and in what location.

You can use our free Borrowing Power Calculator to work this out!

Unless you are exceptionally fortunate, it may be your initial purchase will be a stepping stone, to what you truly want further down the track!

But it will still be a home and at least, you will be in the game!

Determine your savings goal

Once you know what you can borrow, the next step will be to work out what you need to save to cover:

  • Your deposit or equity contribution (Between 10% and 20% of the purchase price. If below 20% Mortgagee Insurance is likely to be required)
  • Loan Establishment Fees, Stamp Duty, Settlement Fees etc

Do your research and create a vision!

Saving for a home deposit, for most of us, will require some sacrifice and change in behaviour.

Therefore, once you know what you can realistically afford, do your research to identify the type of property that fits your budget.

From this build a picture of the property you would be happy to live in – even if it is to be relatively short-term.

Make a (realistic) list of the key “must haves” it should contain.

You will need this “vision” of your future home to maintain motivation and avoid temptation, on the journey towards accumulating your home deposit!

Review your current spending patterns!

The next vital step towards saving for a home deposit, is to go through your Bank and Credit Card Statements to check how you are currently spending your money.

Critically review discretionary spending and look for areas where savings could be made!

(When you apply for Home Loan you will be asked to prepare a Budget to demonstrate you can afford the loan repayments. Banks will then go through your Bank and Credit Card Statements for the last 3 to 6 months, in granular detail, to confirm your spending habits are in line with the Budget!)

Look for ways to save – no gain without some pain!

As stated earlier, saving for a home deposit will likely mean making some sacrifices.

What this looks like will vary from person to person – but some suggestions to consider:

  • Cut out or reduce daily coffees ($4 x 2 per day = $1920pa)
  • Cut down on alcohol
  • Explore cheaper ways to get the exercise you need
  • Buy a cheap coffee machine
  • Take lunch to work rather than buying, save approx. $10 per pay (Save $2400 pa)
  • Look for low cost opportunities to entertain yourself – $50pw – (Save $2400pa)
  • Subscribe to Netflix rather than go to the movies
  • Have friends over rather than going out
  • Use the local library instead of purchasing books
  • Take advantage of end of year and stock take sales
  • Purchase basic food items when on special or in bulk – use low cost providers like Aldi for selected purchases
  • Holiday at home, or locally, rather than going offshore
  • Use “fee free” Bank Accounts
  • Put away the credit card – avoid temptation
  • Review your annual subscriptions to services – are they really needed – are cheaper options available
  • Shift from $ Birthday, Christmas presents, to thoughtful presents – buy during the year
  • Plan your meals for the week and before shopping
  • Grow your own food
  • Shop at local markets
  • Review your mobile plan
  • If possible clear your credit card fully each month
  • Automate your savings

For some, you could always adopt the “Nuclear Option” and move back home with Mum and Dad!

Most parents would be happy to help in this way – and whilst it you may give up a bit of independence for a time, it can help fast track your savings!

Saving for a Home Deposit – Create a Budget!

Having reviewed your spending, the next step is to create a monthly budget – a great tool for this purpose is ASIC’s free, Smart Money Budget Planner

To ensure you stay on track and save money you could also use their Track My Spend App

One feature we really like with this App is the ability to categorise your spending between “Needs” and “Wants”.

Whilst creating a budget and tracking your spending takes work, it will make you more attractive as a borrower when the time comes to apply for your home loan.


There is no doubt in a world of low wages growth and inflated property values, saving for a home deposit can be a real challenge for many people.

Certainly, it does take longer to accumulate a deposit and the amount needed is greater than was the case in the past.

However, with a long-term plan, persistence and some discipline, we have seen with many clients, it is still possible!

If you would like to learn more about the current home loan market and what is needed to receive that magical word “approved”, don’t hesitate to give me a call on 0421 304 990

Chris Anesco

Chris Anesco

I am an experienced Mortgage Broker and love helping my clients access the finance they need to buy a home, upgrade or undertake renovations.

I enjoy building long-term relationships and undertaking research to find truly market competitive offers. Attention to detail is one of my major strengths.

Chris Anesco is a credit representative (399790) of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237)

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