How to save for a house deposit

Once you have an idea of how much you'll need as a down payment, there are a few things you can do to make saving for your house deposit easier.

In this article, we'll discuss some practical steps you can take to save for a house deposit and how to calculate what you'll need.

Most people set a target of saving 20% of the property price. You need to plan for other costs, such as conveyancing and legal fees, that might unexpectedly arise. At HSBC, there are certain circumstances where we can lend up to 90% of the value of the property. However, a deposit of less than 20% will require you to take out Lender's Mortgage Insurance (LMI). You should always think beyond the minimum deposit for a home loan. 

If you're a first home buyer, you may be eligible for the First Home Owner Grant (FHOG) and first home buyers stamp duty concession. Availability varies depending on state and location. 

Calculate your borrowing power

A savings plan calculator can be helpful when building a budget and even to see how the small amounts you save can add up with interest over time.

Having outstanding debts can be a challenge when you're saving for a house deposit. Consider a credit card balance transfer or consolidating any high-interest debts into a single loan with lower interest rates to help you pay them off faster. This simplifies your payment schedule because you won't have to worry about multiple payment dates, fees or interest rates.

Debt consolidation has another benefit, too: if you have fewer debts, banks are more likely to look favourably at you when the time comes to apply for your home loan.

One great way to ensure you meet your savings goal is to set up a designated savings account for your house deposit. Leaving your savings sitting in your everyday transaction account can make it too easy to spend. 

When comparing accounts, you might want to consider the following to maximise your savings:

Some savings accounts reward you for putting money in the bank. For example, you'll get a monthly bonus with the HSBC Bonus Savings account when your balance increases by $300 or more per month (excluding interest) – up to a maximum of $5 million[@Accounts-300-higher-bonus-interest]. To make it easier, you can even set up a regular payment to automatically send a percentage of your salary each month. 

By locking away a minimum of $5,000 for anywhere from 1 month to five years, you get the certainty of a fixed interest rate for that entire length of time. However, keep in mind your property purchase timeline to avoid potential break costs for early withdrawals. 

Explore more: The seven steps to buying your home