Saving for a deposit - Top tips for property buyers

Buying your first home is a really exciting time. A new home, a new start, new memories to be made... There's just one killjoy: that dreaded first deposit.

Seeff advises how to save for your first down payment without breaking the bank:

- When you are serious about saving money the best thing to do is to speak to a financial advisor as soon as possible. There are different ways of saving and every method comes with its own associated risks. It is important that you are well informed before making a decision!

If you want to save money on the short term (generally for two years or less) it is usually best to opt for an account where the interest rate is fixed and you have no risk of losing any money, but if you have a longer approach in mind (2-5 years) then it is often better to invest your money in an ETF, a unit trust or a similar high risk product that could generate more interest, although it also carries a higher risk. Your financial advisor will be able to discuss the pros and cons associated with every option.

In general the following points are also crucial to stick to when trying to save money:

- Do not attempt to save money in an account that you use often. Open an account specifically for the purpose of saving. The lines between what is yours to use and what needs to be saved are at a higher risk of blurring when all your money goes into the same account.

- Save automatically by creating a debit order that goes off from your account well before you have to make any payments. If you don’t create a debit order it could be all too easy not to save the agreed amount because of a “bad month” or choosing to spend it on something else!

- Pay your debt – not only will it give you more disposable income and allow you to save more money on the long term, but a good credit score will also enable you to qualify for a better home loan.

- This is easier said than done but create a budget and stick to it – come hell or high water!

- Faithfully vow to immediately deposit every cash injection you receive (whether it is in the form of a bonus, a 13th cheque, a salary raise or anything else) into your savings account straight away. Don’t let the extra cash become a part of your lifestyle because once you make lifestyle changes (even if they are slight) it is very difficult to let them go!

- Preferably save into an account where you have to give a couple days’ notice to withdraw your money. This will make you think twice before you do it and it is also more admin than merely withdrawing it from an ATM.

- Have a separate emergency account so that you won’t be tempted to use your savings in a crises.

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