13 ways to save for a house deposit

Saving money for a home can be a daunting task, and it may appear to be impossible at times due to the amount of money that must be saved. It is hard to save 20% of the purchase price of any home, and only a few people have that much money in their bank accounts.

However, one may not need to begin saving for 20% of the purchase price of the desired home. Individuals can save far less than 20% of the purchase price or pay no deposit at all. However, one must know what they are doing, so a plan must be in place.

Before proceeding, one must determine how much to save for a deposit and whether or not he or she can afford the home that they wish to purchase.

What to do before saving for a house deposit

One needs to follow some simple steps before they start to save money to make a deposit. Knowing how much you need to save is the first step, and there are several methods for determining how much you should save.

Affordability is another factor that should be carefully considered. Knowing whether or not you can afford a home increases your chances of being approved for a home loan with a deposit.

Here are some methods for determining how much you need to save and whether you can afford the home loan that you need.

Using a Home Loan Calculator 

Using a home loan calculator will assist you in determining how much you qualify for by optimizing a home loan calculator to produce such results. Lenders assist potential clients in this regard by advising them on how much they qualify for and what their monthly installments will likely be based on various scenarios.

A home loan calculator cannot calculate the estimated deposit required that one will need when purchasing a specific home. Home loan calculators are intended to show the amortization of a home loan, the calculation of installments due, affordability, and other fees that will be incurred when purchasing a home for a specific amount.

Home loan pre-approval 

This is the best tool for estimating the amount of a deposit that will be required. Pre-approval is carried out in the same secure manner as a home loan application, but it includes a soft credit check that has little impact on one’s credit record. Credit history, employment status, income, expenses, and other relevant data will be used to determine affordability and the need for a deposit.

The results provided by a pre-approval are nearly accurate because a pre-approval has shown to have a 90% acceptance rate on pre-approved applications. This method should be used with caution, and the assistance of a professional, such as a bond originator, is recommended. With the help of a bond originator, one can gather more reliable information on the amount to save.

Other pathways that can be used to determine the deposit that you should save include:

Using real estate professionals with knowledge can be highly beneficial when purchasing a home and saving for a down payment. The deposit can be negotiated, and you will be well prepared when applying for a home loan.

Now that you know how to calculate the amount of money to save, it’s time to learn how to save money. Whether the deposit is 20% or 5% of the value of the house you want to buy, you can meet your savings goal by using these 13 tips for saving money for a house deposit.

Here are the 13 ways to save money for a house deposit:

  1. Start With a Budget

A budget is a good place to start if you want to save money effectively. An effective budget must be sustainable, measurable, attainable, reliable, and time-bound (SMART). Sticking to the budget will aid in maintaining savings and ensuring that the budget’s purpose is fully realized.

A budget can be used to distribute expenses and income. Money that comes in can be distributed to expenses accordingly, and areas where expenditure can be cut back on can be dealt with easily.

One can use Google Sheets or Microsoft Excel to access free budget tools that can be easily customized. Alternatively, one can use paid budget applications or create your budget sheet in Excel or Sheets.

  1. Create A Savings Goal

Now that a budget or a budget template is in place, it’s time to set a savings goal. The goal here is to save money for a down payment on a house, but the goal must be specific. The amount of money required has to be specified, including the deal line for meeting the milestone.

One will need to devise a strategy for reaching their savings goal. A variety of methods can be used to save money; however, one can devise a savings strategy that will enable them to save money by the goal’s deadline.

  1. Cutting Down on Expenses 

Saving % to 20% of the purchase price of home necessitates discipline and a reducing some of the expenses that are deemed unnecessary. When purchasing a home, an individual will incur costs that are unrelated to the purchase price, such as transfer costs, and cutting costs will help not only with saving money for a down payment but also with having some to complete the house transfer.

Cutting back on expenses may not be for one or two years that you will be saving for a house deposit, but it may be something that has to occur for a while. When you buy a house, you will incur new expenses such as homeowners insurance, property taxes, and other fees. You may want to normalize your new spending habit to avoid financial difficulties after purchasing a house.

  1. Reducing the Use of Demerit Goods

Demerit goods and services are those that are considered unhealthy, degrading, or socially undesirable. These items provide little benefit to your life and may cause long-term harm to your health; therefore, they should be highlighted when cutting costs or downsizing.

Excessive alcohol consumption, gambling, and excessive partying should be reduced or cut off immediately, and the money spent on these products or services should be saved for a down payment on a house.

  1. Track Your Spending 

One should regularly visit and monitor their spending habits. This is because breaking bad spending habits is difficult and hard to sustain once started. To effectively track your spending, you must act as an accountant by keeping a record of all the transactions you make, whether big or small.

Every rand spent must be recorded in your budget in order for data to be collected as efficiently as possible. It is advisable to reconcile the budget on a regular basis in order to effectively keep track of your spending habits.

Using this method, impulsive purchasing can be completely avoided. However, in order to achieve this, one must be extremely dedicated.

  1. Increasing Income

Drawing your budget may reveal that you have little or no money to save. Increasing your income will allow you to save more and save more quickly.

One way to increase your income is to ask for a raise. However, how you do it is important. The timing must be correct, which means you must choose the appropriate time to request a raise, such as after a financial review.

A side hustle is another way to supplement your income. Starting an online store or working as a freelancer can be one way to earn more money. Try to register an account on websites such as Freelancer.com or Fiverr.com to increase your income by making money after work.

  1. Scout For Other Employment Opportunities 

Look for additional job opportunities in the market. A new job means more money and, in some cases, a larger organization to help you grow in your role. You don’t want to settle for anything less than what you have now, and things like employee satisfaction should be taken into account when looking for new employment.

Since you have experience in what you do, try to find a better position than the one you currently hold. This approach will benefit you in the long run. If you believe you are working in a more pleasant and professional environment with better opportunities and the prospect of a salary increase, you should stay with your current employer unless you receive a better offer from another employer.

  1. Cut off vacations

This is an expense that must be completely eliminated until you reach your savings goal. Cutting vacations means skipping vacations during the time you want to save for a down payment on a house. A family of four spends around R35,000.00 on average for a holiday, so saving such money can shorten the time it takes to save for a deposit if the vacation expense is put towards a deposit.

To supplement the need for a vacation, one can visit nearby historical sites or look into places that draw people to a location near you. This way, you can save money on hotel or Airbnb stays as well as travel expenses.

  1. Decrease Credit Spending 

Excessive credit spending has a negative impact on your financial future. In South Africa, credit cards can charge interest rates of up to 22.25 %. Reducing your credit spending will result in lower interest payments and more money to save for a down payment on a house.

Spending on revolving credit should not exceed 30 % of the total credit allotted to your account. Spending more than 30% of your credit limit will have a negative impact on your credit report, which is the last thing you want when trying to buy a house on credit in the near future.

Spending less on credit will not only help you save for a deposit for a house, but it will also help you get future credit from credit providers. This should be prioritized because it will determine whether or not you will be able to afford future credit.

  1. Sell Old Items

There’s a good chance you have items you no longer use, and selling them can help you get the cash you need for a deposit on a house. These items can be sold at merchants such as cash crusaders or cash converters.

There are other options for selling used items online. Using platforms like Facebook market, OLX, or Gumtree can assist you in selling your old items at a reasonable price.

  1. Rent Out A Spare Room

If you live in a house or apartment with a spare bedroom, you should take advantage of its potential earnings. Individuals are attempting to cut back on expenses, particularly rent, in the current economic climate.

Get a roommate to fill the spare room and you might find yourself with some extra cash to add to your savings. Sharing space in South Africa’s major metropolitan areas can cost anywhere from R3,000.00 to R8,000.00.

  1. Ask For Help 

You won’t get to know if someone will be able to help you buy a house until you ask them. You’d be surprised how much money you can get from close friends and family to help you save for a down payment. There is no shame in this, and everyone understands that putting down a large deposit on a house requires a large amount of money.

  1. Automate Savings Debit Orders

Crediting a debit order is the best way to avoid using money set aside for a down payment on a house. The money will be safe, and you will be discouraged from using it to indulge in impulsive shopping.

The funds can be saved in a fixed deposit account, where they will earn interest and grow until you get to use it.


Saving money for a house deposit will require a change in lifestyle, and in order to meet the savings goals set forth, one must be mentally prepared for the changes that come with saving money for a house deposit.

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