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Ways to save enough money for your home down payment

  • Written by: News Feature Team


Aussies are delaying homeownership because they're hampered with a plethora of unnecessary expenditures, waiting too long to get married and have kids, and choosing to spend more on rent. Some are still living with their parents in certain parts of the country. Most don’t have enough finances saved for a down, retirement accounts, much less sitting around in a savings account in cash.

Waiting longer to buy a home means there's plenty of time to prepare financially if home ownership is on your list of life goals. So how will you save enough money for a down payment on that home you’ve set your eyes on?

Calculate how much and how fast you want to save. Consider the cost of the house you want to buy and check 20% of its value. That will serve as your target. If it’s $50,000, divide it by your timeline. If you’re looking to buy in five years, divide it by five. You’ll have to save $10,000 yearly. Divide this number by 12, and you’ll come up with your target monthly savings goal: $834.

This might be simple, but not always easy. Perhaps you’re looking to buy a home sooner. You can shorten it by saving more each month if possible with your current budget.

Once you saved enough money or have pulled out from a source, you must get your mortgage from a trusted source and check their home loan interest rates so you don’t waste your time, energy, finances for nought, and also check what’s right for your needs.

Either way, this is not the only way to save. You can get enough money for a down payment through a plethora of methods. Here are other ways to get the funds you need.

Start small – or big. You’ll be surprised how the smallest contributions can add up over time, so stay on the lookout for ways to cut your spending or save more, so you can utilise that cash for your down payment fund. Simple methods, like downgrading your cell phone service or cable package, can provide a monthly savings lift. If you’re gunning for a faster timeline, you can try bolder changes like ditching your car for public transportation or moving in with a family member to save on rent.

Choose investment over saving. Sleeping money is wasted money. If you’re not planning on buying a home within the next five years, you should try putting your money to work. This means investing in the market. Compound interest, for instance, allows you to exponentially boost the value of your initial contributions.

Invest your down payment cash only if you can handle the risk of losing some (or, worst case, all) of it. You can’t get returns without any risk, plus no investment is certain to make money.

Take from your nest egg. This advice has a big caution sign on it. Taking money from your retirement account to finance a down payment shouldn’t be your first choice. You need to contribute to accounts like your 401(k) and Roth IRA and leave it alone until you retire so you can get the most from it.

Remember, you can always consult an agent/broker to assist you with the entire home purchase process.

Don’t be intimidated by the idea of saving tens of thousands, or more for a down payment. Use the tips above to get you started! And don’t forget to take it one day at a time.

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