So many of us put off homeownership because saving for the deposit seems daunting, but with smart budgeting and these 8 great tips from our VMBS experts the journey to your new home will feel more like a cruise than an uphill climb.
There’s nothing like a good bit of motivation, setting a firm target gives you something specific to work towards. Look at the average cost of homes in your target neighbourhood and use this price to sort out the deposit you’ll need. You should also save for moving expenses and closing costs, which are the processing charges, taxes and legal and agent fees you’ll have to pay in order to purchase a home. The VMBS mortgage calculator on our website gives you an estimate for deposit and closing costs required based on the price of the property.
As a rule of thumb, your deposit should be a minimum of 10% of the purchase price; although there are home purchase options that require a deposit as low as 5%.
You have a target, now let’s start saving, if you have a hard time saving, hold off on all non-essential purchases for seven days, at the end of the week you’ll find that you’ve lost interest in some of them, imagine the potential of those weekly savings over a year.
Who says your fixed costs are fixed. Month to month we budget for spending a relatively set amount on phone contracts, gym payments, groceries and utilities. It’s time to separate your wants and your needs, you’ll find that you actually may be able to cut back. Form a walking group in your neighbourhood to save on gym membership, give those texting fingers a rest and get smaller data plan, switch to less expensive brands at the supermarket or swap your bulbs and faucets for more energy efficient and low-flow options respectively.
Rent a smaller space, get a roommate or move back in with parents to cut back on rental expenses, you could be paying yourself some of the money you’re paying your landlord.
Automating your savings with high-interest accounts, like the VM i-Save, is a savers best friend. You won’t miss what you don’t see. It’s like putting cookies on the top shelf of your pantry so you aren’t tempted to eat them, only with i-Save your cookie multiply. I-Save offers rates 1.90% to 4.40% depending on the amount you commit to saving.
If you come into a lump sum payment, whether through the sale of your car, a partner-draw or your year-end bonus, invest your funds so they get you to your goal faster, if your home is a part of a 5-10 year plan VM’s Money Maker, tax free account, is for you. The VM i-Gain or iGainMore account is a great option if you’re hoping to purchase property in 1-5 years.
Auto payments and maintenance costs add up fast, switching to a smaller car saves on monthly repayments and fuel costs, another cost saver is carpooling. Sharing a ride with just one person means you both save on fuel and wear-and-tear on your car. As a bonus, it will save us all on time spent in traffic.
If you sew, garden, bake, or do nails, if you consider yourself a handyman, you can turn your hobby into money. It may even serve you well to do a short course to become more proficient at your skill. Not only will you earn additional income but you’ll enjoy the time spent doing the things you love.
Wherever you are, there are many ways to get to your deposit. So use our deposit guide and come in and have a chat with one of our homeownership experts. We’ve spent decades thinking about how to make your dream home possible!