9 Ways to Secure a Down Payment for Your Mortgage

You’ve made the exciting choice to step into the realm of homeownership. Saving money for your down payment is now the challenging part. It’s not simple to come up with several thousands of dollars for your down payment.

You may secure the money to obtain the keys to your new home in a number of ways, so don’t panic. You can quickly reach your down payment goal with some strategy and determination, whether you have a few months or a few years to save.

The secret is creating and following a savings plan.

In this post, we’ll look at nine different ways to save money for a down payment, ranging from spending less to getting a second job. Saving for a down payment can actually be a positive experience if you have the appropriate attitude.

Save regularly in a high-yield savings account

Automated monthly transfers to high-yield savings accounts are the simplest way to save for a down payment. Your money can grow faster with these accounts since they provide higher interest rates than typical savings accounts.

Open an account and set a savings goal

Start by saving any amount, even if it’s small. You can increase the amount over time as your income rises or expenses decrease. The most important thing is that you pay yourself first by automatically transferring funds each month.

Reduce your living expenses

To secure a down payment for your mortgage, cutting living expenses is key.

Reduce or eliminate cable TV and streaming services. With so much free content online, cable is a luxury. That savings alone could net you $50-$100/month.

Cook more, eat out less. Cooking at home is so much more budget-friendly. Even replacing just one or two meals out a week with homecooked ones can save $200-$500/month for a family.

Start a side business

A wonderful option to make extra money for your down payment is through a side business. In your leisure time, you could drive for Uber or Lyft, work as a freelance writer, programmer, or designer of graphics, rent out a room in your house on Airbnb, or open an online store where you could sell your handmade goods. There are countless alternatives.

Use your tax refund wisely

Using your tax refund wisely can help boost your down payment fund. Many people get a nice chunk of change back from the government each year but often end up blowing it on non-essentials. This year, consider putting at least a portion of your refund towards your home.

Stocks and bonds

Stocks signify ownership in a corporation. The stock typically increases in value as the company gets more valuable. Bonds, like Treasury bills and municipal bonds, provide fixed interest payments over time.

Bonds are very low risk but often generate lower returns than stocks. However, even earning 3-5% annually on bonds over 10-15 years can provide a sizable down payment fund. The key is starting early and contributing regularly.

Employer assistance plans

Many employers offer assistance programs to help employees with their down payment. Check with your HR department to see if your company offers any of these options:

Collateralized loans

Collateralized loans use an asset you own, like your home or vehicle, as collateral for the loan. If you default on the loan, the lender can seize the asset to recover their loss. While risky, these loans often have lower interest rates since the lender has security.

Sale of real estate

Selling another property you own is one way to generate cash for your down payment. If you have a rental property, vacation home, or other investment real estate, consider selling it to put the proceeds towards your new home.

Selling existing property is an ideal way to secure a down payment if you have investments in real estate. By planning ahead and working with professionals, you can get the best return on your sale and have confidence you’ll achieve your goal of a new home mortgage.

Disaster and relief grants

Disaster and relief grants are offered by the government and non-profit organizations to help those impacted by events like floods, bushfires or medical emergencies. These grants don’t need to be repaid and can provide you with funds to put towards a down payment.

Conclusion

So there you have it, 9 practical ways to save up and secure a solid down payment for your mortgage. You’ve got options, from cutting costs to earning more to tapping into your assets.

Once you’ve got that down payment in hand and you’re signing the papers to buy your new home, all that sacrifice and discipline will have been well worth it. The Australian dream of home ownership will finally be yours. So what are you waiting for? Pick your path and get started saving today!