Every self-employed individual knows how much income can vary from month to month. It’s difficult enough to plan for emergencies, the idea of saving for a house deposit with variable income is even more challenging. Not to worry, though, you can prove to potential lenders that you’re an excellent home loan candidate. It begins with proving that you have a history of regular and steady savings. Let’s take a look at six ways to boost your home deposit saving efforts.
1. Save More When You're Doing Well
When you’re swimming in work and things are going well, the temptation to treat yourself will be great. You have to resist this urge and instead focus on boosting your savings. If you are earning more money, then you should be putting more money away. Consider saving a percentage of your income each month so that no matter what you earn, you’re consistently saving.
Where would you like to live? It’s a good idea to have an area and a neighbourhood in mind. This will allow you to calculate what type of deposit you’ll need, thus providing you with a savings goal. Just don’t forget to calculate legal fees and stamp duty. Depending on the loan you apply for, there will be different fees from different lenders. While it’s possible to secure a loan with a 5% deposit in your pocket, you can avoid extra fees if you push yourself to 20%.
3. Track Your Progress
Humans respond well to visual reminders so invest in an app or make a colourful chart, whatever it takes to give you a visual reminder of how you’re progressing with your savings target.
Self-employed individuals can claim tex deductions that add up when you dig into them. For example, if you work from home you may be able to claim for a portion of your internet, electricity, and other related costs. Speak to an accountant or qualified tax professional to learn more.
5. Tuck it Away
It’s tempting to skip a month of saving or only put something aside when you have a big payday. Don’t let this temptation get you. While your situation is unique, consistency is key. Save something from every payday so that you’re constantly taking little steps to your bigger goal.
6. Income Protection
Have you ever considered what you would do if you were unable to work due to illness or injury? Even a week or two of illness can upset the balance of your income so, it’s important that you protect your income. Income protection insurance is a wise investment. The last thing you want to do is dip into your deposit savings to pay the bills and live on if something goes wrong.
If you’re self-employed, interested in securing a mortgage, and you’d like to learn more, reach out to Seek Mortgages today. We can help connect you to a lender if the major banks have refused your loan application. Or, we can provide you with advice on how best to proceed.