Creating a dedicated savings plan and making consistent contributions is the most effective way to reach your home deposit goal faster. This might mean setting up automatic transfers to a high-interest savings account or looking into government assistance programs designed specifically for first-home buyers.
Perth’s property market offers various entry points, so understanding what you can afford helps set realistic savings targets. Many successful homeowners started by cutting back on non-essential expenses, finding additional income sources, or considering family assistance options to boost their deposit funds.
Saving Tips at A Glance
- Set a Realistic Savings Goal: Work out your total deposit and break it into manageable milestones with a clear timeframe
- Set Short & Long-Term Goals: Combine daily saving habits with long-term planning to stay focused and financially prepared.
- Create (and Stick to) a Budget: Track spending and cut unnecessary costs using budgeting tools to grow your deposit faster.
- Take Advantage of Government Schemes: Use grants and incentives like FHOG and FHLDS to reduce your deposit requirements.
- Speak to an Expert for Guidance: Get personalised advice from experts to fast-track your savings and homeownership journey.
Understanding Home Deposit Requirements
Before you begin your home-buying journey, it’s essential to understand how much money you’ll need to save and what factors might influence your deposit requirements.
What Is a Home Deposit?
A home deposit is the upfront payment you make when purchasing a property. It represents a percentage of the property’s purchase price that you pay directly to the seller. This deposit shows your serious commitment to the purchase and forms the basis of your equity in the home.
Your deposit is a critical component of your home loan application. Lenders view a larger deposit favourably as it reduces their lending risk. It also demonstrates your ability to save money and manage finances responsibly.
The deposit directly affects how much you’ll need to borrow. A larger deposit means a smaller loan amount, which typically results in lower monthly repayments and potentially better interest rates.
Minimum Deposit Needed in Australia
In Australia, most lenders require a minimum deposit of 20% of the property’s purchase price. This means for a $500,000 home, you’ll need at least $100,000 saved.
However, you can purchase a property with as little as a 5-10% deposit. With less than 20%, you’ll typically need to pay Lenders Mortgage Insurance (LMI). This insurance protects the lender if you default on your loan.
Factors Affecting Deposit Amount
Property value is the primary factor determining your deposit amount. More expensive properties require larger deposits in absolute terms.
Loan type affects deposit requirements. Different loan products have varying minimum deposit requirements, with some specialist loans requiring larger deposits.
Your credit history plays a crucial role. A strong credit score might help you secure a loan with a lower deposit, while a poor credit history might require a larger deposit to offset risk.
Employment status matters too. Stable, long-term employment looks better to lenders than casual or irregular work arrangements.
Location can impact requirements. Properties in high-risk areas or regions with fluctuating property values might require larger deposits to secure financing.
5 Tips for Saving for A Home Deposit in Perth
Saving for a home deposit in Perth requires strategy and discipline. The Perth property market has its own unique challenges, but with the right approach, you can reach your goal of homeownership.
1. Set a Realistic Savings Goal
Understanding how much you need to save is the first step toward homeownership. In Perth, most lenders require at least a 5-10% deposit, but aiming for 20% helps you avoid Lender’s Mortgage Insurance (LMI).
For a $500,000 property in Perth, you’d need to save between $25,000 (5%) and $100,000 (20%). Don’t forget to include additional costs like stamp duty, conveyancing fees, and building inspections.
Set a timeframe for your savings goal. If you need $50,000 and can save $1,000 monthly, you’re looking at just over four years of saving. Breaking this large goal into smaller milestones makes the task less daunting and helps you track progress.
2. Set Short & Long-Term Goals
A strong savings strategy balances both short-term wins and long-term planning. Start with your end goal. Your total deposit amount, then break it down into monthly or quarterly targets. This helps you stay motivated and focused, especially when the overall goal feels far away.
In the short term, aim to build consistent saving habits, such as contributing a set amount each pay cycle. You can also set mini-goals like reaching your first $5,000 or $10,000. These milestones give you a sense of achievement and help keep your momentum going.
Long-term goals include preparing for additional costs like stamp duty and moving expenses, or planning how you’ll manage mortgage repayments once you’ve purchased. By thinking ahead, you can avoid last-minute financial surprises and stay in control throughout your homeownership journey.
3. Create (and Stick to) a Budget
A detailed budget is your roadmap to saving success. Track your spending for a month to identify areas where you can cut back.
Essential budget categories:
- Housing (rent, utilities)
- Transportation
- Groceries
- Healthcare
- Debt repayments
- Savings for home deposit
Look for Perth-specific savings opportunities. Many suburbs offer different cost-of-living expenses. Perhaps living further from the CBD temporarily could reduce your rent while saving money.
Use budgeting apps like Pocketbook or the government’s MoneySmart tools to stay on track. Review your budget regularly and adjust as needed to maximise your savings potential.
4. Take Advantage of Government Schemes
The Australian and Western Australian governments offer several incentives to help home buyers.
First Home Owner Grant (FHOG): In WA, eligible first-home buyers can receive $10,000 when purchasing or building a new home.
First Home Loan Deposit Scheme: This allows eligible buyers to purchase a home with just a 5% deposit without paying LMI, with the government guaranteeing the remaining amount.
First Home Super Saver Scheme: You can make voluntary contributions to your super fund to save for your first home, potentially benefiting from tax advantages.
Check the WA Department of Finance website for the most current information and eligibility requirements for these schemes.
5. Explore Flexible Finance Solutions with WOW Homes
Saving for a deposit is just one part of the homeownership journey finding the right finance option is the next. At WOW Homes, our in-house finance team specialises in helping first home buyers across WA navigate the complexities of securing a home loan, even with little to no savings.
From low deposit loans starting from as little as $1,500 to government-backed options like Keystart and the First Home Owner Grant, we tailor finance solutions to fit your personal circumstances. Unsure if you qualify? You might be surprised at what’s possible after a free, no-obligation chat with one of our friendly consultants. We’re with you from your first enquiry to the moment you receive your keys.
Learn More Tips to Save for Your House Deposit With WOW Homes!
At WOW Homes, we’re here to help you take the stress out of saving and make your dream of homeownership in Perth a reality. Whether you’re just starting your savings journey or exploring government grants, our expert team can guide you every step of the way.
Get in touch today and discover even more smart, achievable strategies to build your deposit faster.