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 24 April 2024

Search promoted savings accounts below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
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    Bonus rate for the first 4 months from account opening

    Reward yourself with a higher rate for your good savings habits with the Rabobank High Interest Savings Account . Receive the maximum rate when you grow your balance by at least $200 each month. No Account keeping fees. No minimum balance.

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  • Savings Account

    5.35% p.a. (for $0 to $250,000)

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    Bonus variable rate is available for the first four months.

    Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2023 Mozo Experts Choice Award winner.

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  • Reward Saver Account

    5.25% p.a. (for $0 to $1,000,000)

    0% p.a.(for $0 and over)

    Yes up to $250,000

    Intro bonus rate of 5.25% for balances up to $1,000,000 for the first 4 months, reverting to 3.25%. Minimum deposit of $50 and no withdrawals.

    Introductory bonus rate for balances up to $1,000,000 for the first 4 months. Minimum deposit of $50 and no withdrawals. Start your account online in under 10 minutes and earn interest on balances up to $1,000,000 (T&Cs apply). No monthly account fees, helping you save smarter and faster.

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  • Mozo Expert Choice Badge
    AMP Saver Account

    5.40% p.a. (for $0 to $250,000)

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    Yes up to $250,000

    Enjoy a bonus rate when you deposit at least $1000 per month with the AMP Saver Account.

    No account fees. Unlimited transactions when linked to an AMP Bank transaction account. Easy online access to your money. Option to link your savings account to an everyday transaction account. 2024 Mozo Experts Choice Award winner.

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  • Savings+Bonus

    5.00% p.a. (for $0 to $250,000)

    2.00% p.a.(for $0 to $250,000)

    Yes up to $250,000

    Minimum $100 monthly deposit and no withdrawals to earn bonus interest each month.

    Earn a generous interest rate on your at-call savings (T&Cs apply). Interest is calculated daily and paid to you monthly. A $5 monthly membership fee will not apply if your total account balances with First Option Bank exceed $1,000 or you have a credit card or loan with the bank.

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^See information about the Mozo Experts Choice Savings Account Awards

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