A Gen Y perspective.

With the banks seemingly tightening up and borrowing money becoming more difficult, having a nice, solid deposit can mean the difference between securing a loan and buying that property... or continuing to rent.

There is no magic solution to getting a deposit together; it comes down to patience, hard work and sacrifice. In saying that, if you work smarter rather than harder, building a deposit can take a little less time than usual.

Before we kick off with hints and tips, it's important to begin your deposit-saving journey with a bit of a cold, hard reality check. A challenge to yourself to work out if what you want is feasible in the current market, and if getting it in the time frame you have set, is really achievable.

One thing many of us have learned when setting out on this journey, is that finally laying down that deposit and buying that home is a momentous occasion, and sacrifice is certainly part of the equation that brings us to that point.

But these are also the best years of your life, so measure what you sacrifice carefully and set expectations realistically. Stake your claim on a little bit of real estate, without giving up on the experiences you need to create those memories you will want to look back on when you are older!

Right now, many of us who fall into the Gen Y or Millennial age bracket are going to be looking to purchase our first homes.

We have big expectations, dreams and hopes, just like the generations before us, but because property prices have boomed, we may need to take some smaller stepping stones before we reach that overall goal.

If you have set your sights on a property in an area that comes with quite a big price tag, and your fortnightly pay checks just don't seem to be adding up quickly enough, think about options like rentvesting, to get your foot in the market.

Rent the place you want to now, and purchase an investment somewhere more affordable. Use the process as stepping stone to build your property portfolio over time, so you find yourself in a position to purchase your dream home or property.

In saying all of that -- why not shoot for the moon? You'll at least land among the stars!

So, how about those tips?

1. Scrap unnecessary luxuries for a short time

As we mentioned already, saving a deposit for a property is not without its sacrifices.

Determining what you can and can't live without, then ditching what you don't need for a while, can go a long way towards raising funds quickly. The trick is not to sacrifice every luxury or you will find your savings journey feels a lot longer than it needs to!

Australians spend an absolutely surprising amount of money on luxuries; the interesting thing is, we often don’t even consider them luxuries.

In an average household (especially in urban areas), it’s not unusual to find people who buy coffee every day, purchase mainly brand name groceries, drive to work and pay tolls and parking fees, buy their lunch while at work, get their hair or nails done regularly, and various other activities that constitute a fairly normal life.

If you want to get a deposit together quickly, sit down and work out what the luxuries are and what you can live without for a while, even just for six months! If you just give up Netflix and pay TV, make your coffee at home, take the bus and pack your lunch, you can save thousands!

If you run around the block rather than paying for the gym, dye your own hair and have a barbecue and salads at home with friends instead of going out, you can increase those savings by even more!

2. Make money from your money

It would surprise you how many first home buyers get their deposit together the hard way, scrimping and saving every penny and lovingly depositing it into their standard savings account...

Stop!! You’re taking the long way!

For a start, ensure you are regularly reassessing your high-interest savings account, as sometimes the value of these tend to change over time. Depending on the requirements of the account, you can and should switch up to another provider if you can get a better deal.

While the special savings accounts for first home owners were scrapped in Federal budgets a few years ago, the Government has introduced other incentives that can help.

According to the ATO, the first home super saver (FHSS) allows you to make voluntary contributions to your super, either before or after tax, so you can save your deposit to buy your first home.

As of July 2018, you are now able to then apply to access these voluntary contributions, and any earnings they have made, in order to buy your first home.

Like any Government initiative, there are a few eligibility rules for releasing the money to you, including the requirement you already live in the premises, or that you intend to live there for at least six of the first 12 months after you purchase.

In addition, you can only apply once to have these funds released and it may take just under a month for receipt of the money. You can apply for a maximum of $30,000 to be released, and only $15,000 from any one financial year.

While it may seem a lot of hurdles, this approach to 'forced saving' and the interest and return you can earn is a valuable way to save a useful sum of money in a relatively short period of time.

3. Look for relevant first home owner grants

In addition to the Federal Government Initiative, each state and territory also offers its own initiatives for first home owners. As at date of publishing, the below links can provide more information:

  • The ACT: In the ACT you may have access to a grant of up to $7,000, but this only applies to new homes (build or buy) up to the value of $750,000.
  • In NSW, a grant of up to $10,000 is offered, again only on new homes up to a specified value. You may also receive stamp duty concessions for established properties.
  • In Northern Territory, first home buyers of new properties may be eligible for up to $26,000. There are also notable stamp duty relief options for those buying established homes.
  • In Queensland, you may be eligible for a grant of up to $15,000 (previously $20,000) for new homes (buy or build) valued at under $750,000.
  • South Australia helps out first time buyers or builders of new homes and established homes with the amount varying depending on the circumstances.
  • In Tasmania, people buying or building a new home may be eligible for up to $20,000, and those purchasing established homes may receive concessions on stamp duty.
  • Victoria offers first time buyers/builders of new homes up to $20,000 if the property is valued up to $750,000. Purchasers of established homes may receive stamp duty concessions.
  • In Western Australia, the amount offered depends on the location of the property. Only buyers or builders of new homes up to a specified value will be eligible for the grant, while those buying established homes may receive concessions on duties.

4. Take care of debts

Not surprisingly, as one of the most active online shopping countries in the world, Australians have quite a lot of credit card debt!

As someone working towards purchasing a home, that monthly interest can really eat away at your savings.

Consider shopping around and looking for new credit card providers who will take on your debt at a lower interest rate (or even 0% for a specified time), also covering any transfer fee.

Remember, those initial fees don't always continue, so don't get trapped with a low cost to begin with, that turns into an interest rate higher than you are currently paying.

5. Share the burden

Teaming up through popular investment programs such as ‘BrickX’ to get a foot in the door has become a much more common strategy over recent years.

Essentially, buyers just invest what they can and this gives them some ownership (however small) in a property or several properties.

The properties may offer a small rental or sales return or may appreciate enough to help you grow your deposit as you work towards an investment that is exclusively yours.

If models like BrickX aren’t up your alley, why not make a team yourself.

Select a group of friends who are also ready to invest, consult a lawyer and draw up an agreement, then purchase a property together, all pitching in to make the deposit and monthly repayments more achievable.