How to save for a home deposit

Home ownership may be a future dream for many South Africans, but getting the right steps in place to start the saving process for a deposit is key to making the dream happen. If you’re lost when it comes to saving, particularly saving for such a large investment, then read the tips below to get yourself on track to saving your deposit.

The first step is to figure out how much you need to save, and in order to do this, Gerhard Kotze, MD of RealNet advises the following; “First-time buyers should aim to save a deposit equal to about 10 to 12 percent of the purchase price of the type of home they want before applying for a home loan to cover the rest”. Once you have saved the minimum amount, you can continue to save if you have to find a property you want to buy, as the higher your deposit it, the lower your monthly installments will be.

If you’re struggling to find ways to put your desired amount into your saving account you have to get creative about how to cut back on other things. Could you rent a smaller property closer to work, with cheaper rates and less petrol spent so that you could put more of your income away over the next few years? Or perhaps you can take another look at your food budget. You might be spending more money on takeaways than you thought, and a small adjustment to your weekly meals could help you save a little extra.

If you’ve experienced months where you’ve saved nothing, take a look at what time of the month you decided to put the money away, and you might find it was after you had paid your bills and had a couple of social events with your friends. Putting the money away as soon as you get it, is a good way to ensure it doesn’t get spent without you realising it.

Getting into good savings habits will only benefit you later on, and taking a look at your monthly budget and how funds are allocated, is the place to start.