Saving for a home can feel like a full-time job. Rising property prices and living costs leave little room for life’s luxuries, like a holiday. But taking time out doesn’t have to derail your future home. With the right strategies, it’s possible to do both.
Term deposit for stability
Saving up for your own home takes real discipline. If you have a habit of dipping into your savings, putting your house deposit into a term deposit could be a good way to help you stay on track.
You lock your money away for a set period and earn a fixed return, making it easier to stay focused on your long-term goals. Key benefits include:
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Flexible terms: Term deposits are designed to accommodate a range of financial goals and timeframes. Choose from 90 days to five years, depending on your timeline and allowing you to align your savings strategy with your financial plans.
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Guaranteed returns: When you invest, the interest rate is locked in for the entire term, which means market fluctuations won’t affect your earnings. You’ll know upfront how much money you’ll receive at maturity, providing peace of mind and making it easier to plan your finances. Use our Term Deposit Calculator to work out your potential return.
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Higher rates for longer terms: Banks often reward commitment. Generally, the longer the deposit period, the better the rate.
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Government guarantee: Protected up to $250,000 per person, per authorised deposit-taking institution (ADI) in the unlikely event that the institution fails. It's a strong layer of protection that adds an extra level of security for your savings.
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Low fees: Most term deposits are fee-free, with no ongoing account costs. You simply deposit your money, let it earn interest, and withdraw it at the end of the term. This makes term deposits an efficient, low-cost option for conservative investors or anyone looking to park their funds safely without eroding their returns through charges.
However, the main downside of a term deposit is that you can’t add to it and benefit from compounding interest over time.
Tips for saving for your house deposit
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Set a clear savings goal based on the price of homes you’re interested in and the deposit you’re aiming for. Aiming for 20% or more can help you avoid lenders' mortgage insurance (LMI) and secure better loan terms, though you could enter the market sooner with a lesser deposit.
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Automate your savings by setting up regular transfers to a dedicated account.
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Track your progress regularly and adjust your plan to stay on target.
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Consider staggering multiple term deposits using a laddering strategy to earn higher interest while maintaining regular access to your funds.
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Compare interest rates across different banks to get the best fixed return on your deposit.
Term deposit options for future homeowners
To get the most value of a term deposit, comparing across different providers is key. Consider not just the interest rate, but also the term length, how and when interest is paid, minimum deposit requirements, and what happens at maturity.
High-interest savings account for flexibility
Now that you've got your house deposit squared away, it's time to plan for your next goal: your holiday fund. To set yourself up for success, begin with these basic steps:
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Calculate your total trip cost. Consider flights, accommodation, food, activities, and spending money to get a realistic budget for your getaway.
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Set a realistic savings target per payday. Review your income and regular expenses to decide how much you can comfortably put aside each pay cycle without stretching yourself too thin.
The beauty of planning a trip is that many of the biggest expenses are staggered - for example, flights are often booked well in advance. This lets you smooth the costs out over time.
You can use our Budget Planner Calculator to help work out a budget, or see how long it would take to reach your goal with our Savings Plan Calculator.
Once you've set your savings target and contribution amount, you can start looking for the right high interest savings account to make your deposits into. A high-interest savings account is often ideal because:
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Easy access: Withdraw your money anytime without penalties, perfect for unexpected expenses or last-minute plans.
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Competitive interest rates: Generally higher than standard savings accounts, helping your holiday fund grow faster, so you can reach your dream trip sooner. Online accounts typically offer higher interest rates due to low overheads.
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Bonus and introductory rates: Many accounts offer higher rates for a limited time to boost your savings early on.
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No fixed term: You can add or withdraw funds as needed, providing maximum flexibility.
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Low or no fees: Most high interest accounts have minimal fees, so more of your money stays working toward your holiday, not paying for charges.
It’s important to be mindful of what the interest rate will revert to when the introductory period is over, and take note of the conditions under which the bonus interest rate will apply. These may include limits on monthly withdrawals, minimum monthly deposit requirements, or maintaining a minimum balance. Failure to meet these conditions could see your interest earned plummet for that month - so, it’s worthwhile picking an account with conditions you can realistically achieve.
Tips for saving for your next holiday
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Set a clear budget for your trip, including flights, accommodation, and spending money.
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Watch exchange rates if you’re travelling abroad to decide the best time to convert your money.
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Keep your savings separate in a dedicated account to avoid dipping into it.
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Plan when to book your trip as booking early often saves money for fixed plans, while some airlines offer last-minute deals that work well if you’re a flexible traveller.
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Choose an account with competitive interest rates to help your holiday fund grow faster.
High-interest savings accounts for your next getaway
Not all high-interest savings accounts are created equal. Choosing the right one for your needs can make the biggest difference. Compare key details like interest rates, access to funds, minimum balance requirements, and any introductory offers to help you find the account that fits your saving goals.
