How to save money for a house

From tips on making extra income and boosting your savings through to government schemes you may be able to access, here’s a list of 10 ways to save money for a house.

A house is likely to be one of the biggest purchases you make in your lifetime, and if you’re thinking of getting into the property market, then your focus is likely to be on making the balance of your savings account as healthy as possible.

In addition to the deposit, there are many other potential costs associated with buying a house, from conveyancing fees through to moving expenses, and even potential expenses you may not anticipate, such as lenders mortgage insurance.

If you’re wondering how to save money for a house, this list of 10 tips may give you some food for thought and help you out on your journey.

How to save money for a house: 10 tips

While your own circumstances will dictate your budget and how best you might go about saving money for a house deposit and other associated expenses with buying a property, we’ve compiled these ten tips to help get you started:

1. Set a savings goal
2. Make a budget
3. Find a savings account with a high interest rate
4. Consider a side hustle or a second source of income
5. Move in with family or friends
6. Sell your unwanted gear
7. Get your debt under control
8. Look for bargains
9. Review your finances to find better deals
10. Check your eligibility for government assistance.

1. Set a savings goal

If you’re saving for a specific purpose, then having a goal amount in mind can help focus you and give you something to work towards. Canstar has a guide to how much money you might need for a house deposit, and you can use our home loan borrowing power calculator to work out how much money you might be able to borrow.

By having set goals and a savings plan in place, you could be on your way to building your savings for a home deposit, and eventually becoming a homeowner. When it comes time to apply for a home loan, make sure you do your research to compare home loans and find a product that offers outstanding value – performing well across both price and features.

2. Make a budget

Keeping track of your monthly expenses can help you get a picture of where your money is going, and give you some ideas about opportunities to reduce spending and save some cash. You can do it the old-fashioned way with a pen and paper or budgeting spreadsheet, or if you prefer, there are a number of budgeting apps available that can help get you underway, including the Canstar App (powered by Frollo).

Over time, you may find some areas where you’re spending a lot of money each month, whether that’s on takeaway coffees and breakfast, streaming services, or even grocery bills, and find some opportunities to cut spending.

3. Find a savings account with a high interest rate

It’s not just how much money you save that’s important, it’s where you put your money, as this can influence how quickly your savings grow. If you’re putting cash away in hopes of saving for a house, it can be a worthwhile idea to find a savings account that offers you a high interest rate, with low or minimal fees.

You can compare savings accounts with Canstar. Banks sometimes offer deals and incentives to new savings customers, such as high introductory or ‘honeymoon’ rates, so you may even be able to take advantage of this, to help give your initial savings a boost. Just remember to consider moving your money if necessary so you’re not missing out when the intro rate ends. Also make sure you’re able to meet the criteria if the account pays bonus interest, as the base rate on bonus saver accounts is often quite low.

It can pay to look around for the best deal available for you and to consider setting up online access so you can keep track of your accounts. You could also consider setting up regular automatic transfers from your everyday account into a separate savings or term deposit account that is purely for your home deposit.

4. Consider a side hustle or a second source of income

Thanks to the rise of the sharing economy, it’s now relatively easy to take up a side hustle. This can be anything from driving for a ride-sharing or food delivery service through to walking dogs and pet sitting, or even offering your skills more generally on an online marketplace such as Airtasker.

You could even find a way to put your creative or artistic skills to work. If you’re a visual artist or designer, you could sell your designs in an online art marketplace such as Redbubble, and if you’re a keen photographer, you may even be able to sell your images to a stock photo website.

There are numerous ways to make a side income, and if you’re interested to know more, Canstar has a guide to some other ways that you can make money from home.

5. Move in with family or friends

Whether you’re living alone or with a partner, the cost of rent and bills can stack up, especially at this point in time, with high levels of inflation in Australia and an ongoing cost-of-living crisis. If you’re trying to save for a house, and you have friends or family that you’d be happy to live with, one option to save money might be moving in with somebody else.

Living with roommates and splitting the cost of rent and utilities may be one way to help you put money aside for a home. Likewise, living with family can be another way to save money, but no matter what you choose, it can be worthwhile to have an arrangement in place to make sure you split household expenses and bills fairly.

6. Sell your unwanted gear

If you’ve got some unused items lying around at home, you could consider selling them online for extra cash. Collectible items like toys and video games, vintage and designer fashions, or even appliances and furniture that you don’t use anymore could all be sold for cash.

If you have enough items to sell, you could throw a garage sale, or if the idea of people pawing over your gear is not appealing, then selling your items online is easy, with a range of internet marketplace like eBay and Gumtree to choose from.

7. Get your debt under control

If you have outstanding loans that you are paying money on – a car loan, for example – then paying these down quickly can mean you will pay less in interest in the long term, leaving you more money to put towards saving for a house. Bear in mind, though, that some loans have early repayment fees, so it is worthwhile checking the fine print of your loan or asking your lender if this may apply to you.

If you have multiple debts, depending on your circumstances you may also find it worthwhile to consolidate some of them into one, which could potentially help you reduce the fees you pay and make repayments simpler. Otherwise, you may want to start with the debt that is accumulating the most interest and work your way back from there.

8. Look for bargains

You may be surprised at the number of bargains that you can find if you break from your usual routine. For example, when you go grocery shopping, you could experiment with cheaper alternatives to your usual brand, buy in bulk if you can and think twice before adding last-minute ‘luxury products’ to your trolley. There are also a number of coupon sites online, such as Shop A Docket or Groupon, that may offer deals in your area, but make sure to check the terms and conditions of each offer before making a purchase.

When buying more expensive items, such as appliances and whitegoods, or even some smaller electronic items,  you may be able to find better prices by doing your research and asking stores if they are willing to match prices.

9. Review your finances to find better deals

You may be able to save money simply by reviewing your current insurance, loans, electricity, internet or other financial arrangements and determining whether they provide the best value for your needs and budget. This may even be an opportunity to save by switching phone plans if you feel like your current one is too expensive, and there’s a better deal out there for you.

Shop around and compare as many options as possible, and if you find a better deal elsewhere, don’t be afraid to switch providers or to contact your provider to see if they can offer a better deal.

10. Check your eligibility for government assistance

If you are an aspiring first home buyer, there are a number of government grants available that may help you save some money and get into a home sooner. These include:

• The First Home Guarantee (FHBG) – Formerly known as the First Home Loan Deposit Scheme (FHLDS), this government-backed scheme has low-deposit home loan options available, with a limited number of places each year for low- and middle-income Australians who’ve saved up as little as a 5% deposit.
• The First Home Super Saver Scheme (FHSS) – This scheme allows you to save money for your first home via voluntary contributions to your super fund.
• First Home Owners Grants and Concessions – There are various grants and concessions available for first home owners on a state and territory basis around Australia, and one of these may apply to you in your circumstances.
• Family Home Guarantee – This scheme aims to help single-parent families get on the property ladder with as little as a 2% deposit for a home.

Cover image source: NDAB Creativity/Shutterstock.com