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How can I save for a property deposit?

Day in and day out the most common phrase I hear from customers is “I haven't saved enough for a deposit”. Clearly this is a big hurdle, especially in today’s market. So this advice is for those of us who aren’t lucky enough to have a rich uncle or family members that will act as guarantors.

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Outline your goal


Before we dive headfirst into this, we must start with WHY. Everyone in Australia is obsessed with property but why do YOU want to hop on the ladder? Why is saving for a deposit to buy a house so compelling to you? What is the driving force behind your intentions? Think long and hard about this - there is no right or wrong answer. You might want this because you have always wanted to start investing in real estate, but why? This question is something you must seriously consider before you get started on your journey.

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If you can begin with the end in mind, that means you have a clear goal with an official deadline. Do not set a target that is impossible and likely to burn you out, or that is too easy and not challenging, but rather a sweet spot in the middle that stretches you just enough. As Benjamin Franklin once said, “If you fail to plan, you plan to fail.”

Action: A good exercise is to ask yourself WHY three times, each time going deeper and deeper into the root motive of your intentions. Understanding this will act as your emotional driver.

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Create a savings plan


To start a savings plan, you first need a specific figure and a realistic timeframe are essential to save for a deposit. Start by reverse engineering the end figure to break down how much you should be putting away each month.


  • Let’s say the maximum price you’ll pay for a property is $600,000.
  • The minimum deposit you’ll generally need is 10%, so $60,000.
  • Now, before we do anything else, we must set a realistic timeframe as to when this deposit will be sitting in our bank account, ready to place on a beautiful piece of real estate. For instance, it may be $60,000 by October 2019 (starting October 2017).

Okay, so how much do I need to put away into my account each month in order to have $60,000 saved in two year’s time (if that is your goal)?

  • Around $2,500 per month is about $625 per week.
  • The nature of the market means most will be saving with a partner, so start by depositing $312.50 per week each, into a separate savings account.
  • A lesson from possibly the greatest investor of our time, Warren Buffett, “Don’t save what is left after spending; spend what is left after saving”.

Of course, these figures will differ for everyone, depending on your lifestyle, salary and so on. Create your own plan and stick to it.

*Action: Start by opening up a separate savings account (preferably an incentive saver where you earn bonus interest if you do not make any withdrawals). Start depositing your weekly goal as if you were paying rent.

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Document your expenses


Now, write down all your current monthly expenses, both fixed and variable. To begin with, try tracking your spending habits for a month, there are plenty of apps out there that can do it for you.

Take, for instance, the habit of buying a cup of coffee a day. While $4 a day may not seem like much, that is a pricey coffee at over $1000 a year, and if you’re eating out every day, you can multiply that number by five. So let’s be honest, the instant coffee at work isn’t fantastic but at least it’s FREE. Learning to make small sacrifices like this will contribute to the bigger picture and will get you to your goal faster.

Many expenses are variable, meaning they are subject to change, so you can work to minimise them. Rent may be a fixed cost every week, but you might think about moving elsewhere to pay cheaper rent. Or, perhaps get some flatmates to split the rent or even move in with the in-laws for a short period.

It’s also smart to evaluate your smaller recurring expenses, like switching over to a cheaper phone bill. You may be surprised by the number of variables you have the power the change and minimise.

Action: Start by tracking all monthly expenses. At the end of the month, analyse and evaluate each expense and outline any possible ways of reducing them.

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In summary

I get it, not all plans work out, and emergency expenditures arise from time to time, but it is crucial that you stay diligent in your work and disciplined in your actions. Make adjustments to the plan and jump back on the path as soon as you can. The only time you should look back is to see how far you’ve come (and how much you’ve spent).

OUTLINE YOUR GOALAsk WHY three times. Dig deep and really understand why you would want to take on this journey.
CREATE A SAVINGS PLANSet a clear target with a realistic timeframe.
TRACK YOUR EXPENSESTrack your monthly expenses. Become aware of how much you are spending on what so you can start making conscious decisions.

Happy saving!

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About the author: Anthony Giacchi is an Associate Home Loan Specialist at Lendi. He is passionate about helping customers begin their home loan journey and pointing them in the right direction towards the best possible outcome.

Tags: genuine savings, saving, deposit, low deposit, no deposit home loan, first home owners grant, first home buyer, new purchase, new home

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Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of lenders including ClickLoans, a related body corporate of Auscred Services. Although Lendi compares over 1600 products from over 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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