22 Nov Not Enough Deposit? Tips To Start Saving For Your First Home
Buying a first home is an exciting milestone, but it comes with the challenge of saving up for a deposit. In New Zealand’s dynamic property market, saving a big enough deposit can make all the difference when it comes to getting a home loan approval and securing the best interest rate available. If you’re a first home buyer struggling to save the deposit you need, we have some practical tips that could help you reach your home ownership goals sooner.
Track your spending and outgoings
One of the most effective ways to save for a first home deposit is to get a clear understanding of where your money is going. Having an overview of your financial situation could help you make changes that better align with your home ownership goals.
- Carefully track your spending to identify areas where you can cut back and redirect funds towards your deposit.
- Keep a detailed record of all your expenses, from rent and groceries to entertainment and transport, and use a budgeting app to streamline this process.
Use the 50/30/20 budget rule
The 50/30/20 budgeting rule is a tried-and-true method for managing finances. By sticking to this budgeting method, you’re making sure that a significant portion of your income goes towards your deposit to reach your home buying goal. The 50/30/20 rule works by assigning 50% of your income to essentials such as rent, utilities and groceries, 30% to discretionary spending such as entertainment or eating out, and 20% to savings.
Set up an automatic savings transfer
Automating your savings can be a powerful way to effectively grow a savings fund over time. It removes the temptation to spend your income as soon as it’s paid to you, and lets you consistently build up your deposit.
- Set up an automatic transfer from your everyday bank account to an interest-bearing savings account on payday.
- Consider the option of automatically rounding up any spending and moving the extra amounts into a savings fund, which allows your savings to grow in the background each time you spend.
Skip the takeaway – try “fake away”
Eating out regularly or ordering takeaways every week can be a significant drain on your finances.
- Try recreating your favourite restaurant dishes by cooking meals at home. Not only is this more cost-effective, but it can also be a rewarding way to spend time with loved ones.
- Sign up to a food delivery service which provides recipes and all you need to cook healthy and delicious meals, and you’ll soon be cooking like a restaurant chef!
Review memberships and subscriptions
Take a critical look at your monthly subscriptions to determine how often you use these services and the value they provide. Redirecting these funds towards your savings can make a big difference over time.
- Cancel or downgrade the services you can live without or aren’t using to their full potential.
- Check if there are any savings by bundling or combining subscriptions.
- Switch to an alternative subscription plan that better suits your needs.
- Set a reminder to reassess your subscriptions every three to six months to check you’re still getting the best value.
Consolidate your debt to get debt-free faster
If you have multiple sources of debt, consider debt consolidation loans to help you secure a lower interest rate and simplify your repayment process. By paying down your debts more efficiently, you’ll free up more funds that can go towards your deposit. A debt consolidation loan works by adding up all your smaller debts and then paying them off with just one overall loan product.
Because debt consolidation loans have a set end date, you’ll know exactly when it will be paid back in full. And, with more manageable loan repayment amounts, there’s less chance of any missed repayments which goes towards building a positive credit score, instrumental in helping you get credit finance approval.
Work with an expert Mortgage Adviser
Engaging the services of a professional Mortgage Adviser can be a real game-changer. Mortgage Advisers – such as those at Max Mortgages – have the expertise to guide you through the intricacies of the mortgage process, helping you secure the most suitable NZ mortgage and home loan deal with the best rate and terms possible. It’s never too early to seek advice from a Mortgage Adviser. Even if you’ve just started saving for your deposit, our Mortgage Advisers can advise on how to manage your finances more effectively while saving for your first home and ways to pull together your deposit, including exploring KiwiSaver and government support. In addition, we may also be able to help you secure a home loan with less than a 20 percent deposit, speeding up your journey to homeownership. However, it’s still advisable to follow the tips in this blog to save consistently, as most lenders now usually want to see a percentage of your deposit as genuine savings to ensure your ability to meet repayment commitments. Give us a call on 0800 ASK MAX (0800 275 629) to find out what Max Mortgages can do for you!
The right strategies and advice you need to grow your deposit
Saving for your first home can seem like a daunting task, but with the right strategies, it’s entirely achievable. By making small adjustments to your spending habits and getting expert advice from a Mortgage Adviser, you’ll be well on your way to saving the deposit you need. Every dollar saved is a step closer to turning your dream of home ownership into reality. Contact the team of Mortgage Advisers at Max Mortgages and get the advice you need to grow your deposit.
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