Your deposit is one of the most important parts of applying for a home loan. The more money you have to put down, the more likely banks are to approve your application. And that’s just half the story. Large deposits also allow you to reduce your monthly mortgage payments and can help you secure a shorter loan term.
Of course, saying you are going to save for a home loan deposit and actually doing it are two different things. It takes time and will power to put those pesos in the bank and not spend them elsewhere. However, we have a few hacks to help you save for a home loan deposit.
3 tips to you save for a home loan deposit
1) Watch what you eat
No, we’re not talking about your diet here. We are focusing on all those evenings spent eating out at hot new restaurants. Sure, the photos you take might get a few likes on Instagram, but the money you spend could be going to your home loan deposit. When you sit down and do the math, you might be shocked to find out just how much you’re spending in restaurants each month.
Let’s say each meal costs PHP1,000 and you eat out four times a week on average. You are spending roughly PHP16,000 a week just on dining out every month. That’s nearly PHP200,000 a year! This isn’t to say you should never eat out. But if you cut back your dining habits by half, you’ll add some significant cash to your home loan deposit.
2) Don’t trip
Holidays are great. However, they can be a drain on finances as well. Sure, airlines and travel websites offer great deals, but you are never going to save any money if you are taking trips all the time. Even if the cost of the hotel and transportation is cheap, you end up spending a lot when away from home. Food, drinks and souvenirs aren’t free.
Instead of taking a bunch of spur of the moment trips, plan ahead and limit yourself to a few getaways each year. Choose places you actually want to visit instead of letting discounts guide you. This will make your trips much more enjoyable while also helping you save for a home loan deposit.
3) Forget about FOMO
FOMO (Fear of missing out) drives a lot of financial decision making. Many people focus on the missing out part when they should be focused on whether or not they actually need an item in the first place. Chances are there are a few FOMO purchases lying around your home as we speak.
These items, such as clothes and electronics, seem like things you need or want and your decision to buy them is driven by that fear of missing out on them. Yet once you purchase them, they can go unused unless you truly valued them. It’s vital that your decision to buy something is not driven by FOMO. That’s because the money spent on these FOMO purchases could instead be used to save for a home loan deposit.