When one plans to buy a new house or a property, there are many aspects that they need to start working on. After all, the decision of buying a house can not be as instantaneous and casual as most of the other purchases that people make on a regular basis. The first important task is to apply for a savings account scheme. Never before has it been as important to have substantial bank accounts savings with the prices of property soaring. As buying a new house is one of the biggest financial decisions of one’s life, it is extremely critical to plan it carefully.
Therefore, it is important to analyze one’s monthly budget and see how much can be kept aside every month. As the end goal of such savings is a mammoth one, one needs to set aside a fair amount in order to accomplish it. Moreover, it is best to begin saving early. Planning the budget also helps calculate the duration for which savings need to be done. For example, if one is planning to buy a terraced house, they’d need at least $41000 which is 20 % of the current average price. On saving $400 a month, it wouldd take less than nine years to get to that amount.
Here are a few tips on how a person can save for a new house:
• When deciding what savings account to choose, a fixed-rate account would suit best for such a goal.
• One could opt for either regular savings account or fixed-term deposits. One can also give a standing order to the savings account which will help earn more interest. However, in case of a fixed term deposit, the amount may not be readily available to the account owner.
• Taxpayers can get tax-free interest in a cash ISA. However, one needs to ensure that they get a good interest rate, lest the tax benefits will be overruled by low returns.
• It is recommended not to save more than $85,000 in any single bank savings account. For account savings up to this limit, the amount is safe even in the event of the collapse of the firm, as authorized building societies are mostly protected.
Saving for a new house is a challenging task; however, if one treads with proper planning and care, they would be able to save enough and soon too.
Posted by: Cindy Broadhurst
Cindy Broadhurst is a professor of finance in Melbourne. She stresses the importance of a savings account and conducts seminars on budgeting for newly married couples.