Saving for a deposit

Watching your savings grow and reaching financial goals is a great feeling.

A home deposit is money saved, usually between 5 to 20% of the property value you want to purchase. The more money you save for your deposit, the less you have to borrow and the more you save on loan interest. So it’s important to remember that this process is a marathon and not a sprint.

Below we touch on a few things to ask yourself when saving for a home deposit.

What are your spending habits?

An effective way to manage your cash flow is through a budget. When creating your budget, be realistic about your spending, don’t underestimate your living expenses and account for the fun activities you regularly enjoy. Once your budget is set up with your expenses and income, how much do you have left to save? Aim to save 10% of your income if you can.

To help you save for a deposit, ‘pay yourself first’. Set up an automatic direct debit the day after your pay hits your account to transfer money from your everyday account into a separate savings account. You then leave your savings account to grow over time and only spend the money that’s in your everyday account. By separating your money as soon as you are paid, you’re not likely to miss it.

Make sure you regularly cross check your spending habits against your budget to keep you on track. When you buy a home, you will be making regular repayments to your loan so it is helpful to get into good money habits early.

Our Loan Repayments Calculator will give you an idea of what your loan repayments may be in the future, so this is a good starting point as to the amount you should be separating into a savings account.

What counts towards the deposit?

Genuine savings are usually a requirement when saving for a home deposit. Most lenders will want to see a record of deposits into a savings account that were made over at least 3 months, to show your ability to save and manage your money.

There are also a few other things that can count towards a deposit. These are:

• Shares and equity.
• Gifts of money.
• Family guarantee.
• First Home Owner Grant (if eligible).
• First Start Shared Equity Agreement (if eligible).

Don’t forget, if your deposit is under 20%, Lenders Mortgage Insurance is required. This protects the lender, not the borrower. Also, you’ll need to set aside money for other costs too such as stamp duty. This should be included in your deposit.

Need help to get started?

Planning your finances and saving for a home deposit is the start of an exciting journey. We have a range of tools available to help you get started and save for that home you’ve been dreaming of.

• Online calculators
  Budget Planner Calculator
  Savings Calculator
• First Home Bonus Saver Account
  Some financial institutions provide savings accounts with incentives to help First Home Buyers save for their deposit. Snow Star Credit Union offers a First Home Bonus Saver Account which offers bonus interest¹, $600 cash back and a $0 establishment fee when your Home Loan is funded by the Bank². Find out more.
• Term Deposits
  Term Deposits can be a useful tool to save money because your funds are set aside for a specified term, reducing the likelihood that you will dip into them for other purposes. Find out more about the range of Term Deposits we offer.
• Our Android and iOS Mobile App also have a Savings Goal tool to help you track your progress.