How to buy property as a millennial
Here’s how to boost your savings so you can afford a home.
How to save a home loan deposit, fast
Australian property prices have been rising substantially in recent years, with capital city dwellings appreciating by 10.9% in 2016 alone. If you want to boost your house deposit, a high interest savings account offers a flexible and convenient way to fast-track your savings. With low or no monthly fees, high interest savings accounts allow you to continue building your deposit while still having access to the funds whenever you need them.
Online savings accounts tend to offer the highest interest rates, while bonus saver accounts incentivise saving by rewarding you with bonus interest when you meet certain conditions – for example, making minimum monthly deposits or limited withdrawals. o optimise your savings, use our Budget Planner Calculator to work out the maximum amount you can afford to set aside each month, taking into account regular expenses such as rent, food, utilities and travel, entertainment or leisure spending money. You may want to set up an automatic debit to come out of your transaction account on payday so you don’t forget to make regular payments, and add any extras on top whenever possible.
Take an interest in your savings
If you’ve already saved a lump sum towards your deposit, you may want to consider placing it out of reach in a term deposit until you think you’ll need it. Term deposits offer attractive, fixed interest rates over a fixed term. While it is possible to withdraw your money before the end of the agreed term, your lender may calculate an interest rate adjustment. This should hopefully keep your deposit safe from temptation.
You can choose terms of up to five years, and you’ll know exactly how much your money will have grown by the time it matures. Generally speaking, the longer the term, the higher the rate. For example, if you put $15,000 into a three-year term deposit at 3.2% interest paid annually, you would make $1,486.57 over the course of the investment.
Term deposits are government guaranteed up to $250,000 and usually fee-free, making them a safe and reliable investment. Use our Term Deposit Calculator to work out your potential return. Alternatively, you could put that same $15,000 into a five-year term deposit at 3.3% paid annually and make $2,643.83.
With the right savings plan, there’s no reason why you can’t build the deposit for your first home. Whether you prefer the flexibility of a savings account or the stability of a term deposit, remember to compare offers to make sure you’re getting the best deal.