How saving regularly could help you secure a home loan

Australian coins and banknotes.

When you apply for a home loan, it is ideal to have at least a 20% deposit saved up. That is 20% of the property purchase price banked and ready to pay up front. 

In reality though, property prices are mostly on the rise in Australia and as such a 20% deposit can be an impossible goal for many. This is where being a regular saver comes in handy.

Getting a loan with a small deposit

While most lenders do offer loans to borrowers with a smaller deposit, these types of loans are seen as higher risk. For this reason, borrowers with a deposit under 20% will most likely have to pay lenders mortgage insurance. That is unless they are eligible for the First Home Loan Deposit Scheme or the Family Home Guarantee

As well as this, getting approval for a loan with a smaller deposit will most likely be a bit harder.

How ‘genuine savings’ can help

When applying for a home loan with say a 10% deposit, some lenders may ask to see evidence of genuine savings. Usually genuine savings will need to make up at least 5% of a smaller deposit. 

What exactly are genuine savings you ask? Genuine savings are savings built up gradually over at least three months. So, an inheritance, a tax rebate, a work bonus or any other kind of lump sum wouldn’t count. Here are a few things that could count as genuine savings:

  • A rainy day fund built up over at least three months
  • Money held in a term deposit for at least three months
  • Salary sacrificed with the First Home Super Saver Scheme
  • Shares or managed funds held by you (the borrower) also for at least three months

Having genuine savings provides some evidence that you will be able to make good on your home loan payments.

How to build up genuine savings

While building up a savings nest egg is not always an easy task, there are a few tips and tricks that can help. 

Here are just some ways you can fast track your savings:

  • Budget, budget, budget! We know this advice is as old as the hills, but drawing up a budget really can help. It doesn’t have to be super detailed, if that isn’t your jam. A budget is simply a way to review what you’re spending right now and see where you can cut back.
  • Save on bills. Take a second look at your regular bills. Are you paying too much for energy? Could you be on a cheaper home internet plan? Shopping around on bigger household expenses such as these could help you save more money in the long run.
  • Compare insurance quotes. Insurance is another big expense for many. To cut down on what you pay, you could gather quotes from other providers to see if there are any savings to be had. 
  • Have fun for free! Try to avoid comfort spending and look for fun things you can do for free. This could be going to the park or a museum. Or if you’re stuck at home during a lockdown, learning a new skill using free online tutorials.

Lastly, you might even consider opening a savings account for your stash. These days savings accounts come with so many nifty features, they can actually encourage you to save more! Some of these include automatic bank transfers, a roundup tool, reminders, savings buckets and so forth.

Head to Mozo’s compare savings accounts page to see what’s out there, or take a look at the deals below. You could be squirrelling away money in no time!

Compare savings accounts - last updated 27 November 2021

Search promoted savings accounts below or do a full Mozo database search. Advertiser disclosure
  • Boost Saver with Go Account
    Maximum rate
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    1.50% p.a. (for $0 to $250,000)
    0.10% p.a.(for $0 and over)
    Yes up to $250,000

    Intro bonus rate of 1.50% for first 3 months, reverting to 1.20% after. Deposit $2,000 each month and make 5 eligible payments from your Go Account. If you are between 18 and 25 deposit $1,000.

    Enjoy a savings account bundled with a spending account. No monthly fees. New customers can earn up to 5000 bonus Virgin Money points on purchases (conditions apply). Benefit together with a joint account

  • High Interest Savings Account
    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    1.35% p.a. (for $0 to $250,001)
    0.25% p.a.(for $0 to $250,001)
    Yes up to $250,000

    Bonus rate for the first 4 months from account opening

    Kick start your savings with the 4 month introductory variable rate. No fees, no minimum balance, no minimum monthly deposit and no minimum term.

  • Grow Saver
    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    0.65% p.a. (for $0 and over)
    0.10% p.a.(for $0 and over)
    Yes up to $250,000

    Make at least 1 deposit and no more than 1 withdrawal, including internal transfers or external payments.

    Earn a maximum interest rate of 0.65% per year. Pay no monthly fees. Set up in-app savings goals. Benefit with joint account options.


^See information about the Mozo Experts Choice Savings Account Awards

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