uying a home. The second step is obtaining a loan to make up the balance of the purchase price. In Australia, when a customer applies for a home loan the bank requests that the deposit is ‘genuine savings.’ That is, that the customer can prove the money for the deposit was saved over a period of time.
Here are some tips to reach the savings target faster.
Establish a Savings Goal
Depending on the income and the proposed purchase price of the property establish a realistic savings goal. It is easier to stay motivated and resist the temptation to dip into savings if the goal is realistic and achievable.
Budget to Build Savings
Keeping a record of finances and tracking spending habits is an easy way to see where to cut costs and what can be done to save more money. For instance:
Save as Much as Possible but Regularly
The amount that is saved is not the important thing. It is saving any amount but doing it as often as possible. It is better to get into the habit of saving small amounts on a regular basis than wait to save large sums occasionally.
Keep the Savings Account Separate from the Day-to-Day Bank Account
When savings are kept separate it will be motivating and very satisfying to see the balance growing. Having a separate day-to-day account will also help to eliminate the temptation to dip into the savings for everyday expenses.
Choosing a Savings Account
Banks and other institutions have various savings accounts with features and benefits to suit different personal requirements. Do some research to see which suits the individual or family needs. Generally accounts that carry a higher rate of interest require the funds to be left in the account for a set period and will incur penalties if the money is withdrawn early. Other accounts may give easier access to the funds but will have a lesser return on investment by way of lower rates of interest.
Having an established monetary goal, opening a separate savings account and depositing regular sums will help to reach the goal of saving for a deposit to purchase a home easier.
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