The down payment is one of the things that you need to think about when applying for a mortgage. That’s why it’s crucial to save up for it before you start your house hunting.
But saving up for a down payment when buying a land for sale in places like Northern Melbourne is no easy feat. You need to resist the temptation of buying things while learning how to put aside some money at the same time. You also need to consider the best place to park your funds.
The amount that you need to save
When banks and other lending institutions grant a mortgage, they often require a down payment to reduce the risk of any financial loss. Banks would usually require borrowers to come up with at least a fifth of the property’s purchase price before they grant the loan.
For those who have an excellent credit score or qualify for a specific loan program, there’s a considerable chance that banks would ask them to pay less than the typical 20% home deposit. Depending on your loan program eligibility, there are times when the bank will not require any down payment entirely.
However, those whom the banks consider as high risks may need to pay a higher percentage of down payment based on the property’s value. Nevertheless, finding the best place to save your money for a down payment is a must.
Where to keep your money for your down payment
Many people choose to keep their funds in their savings account through their bank or with the credit union. This option isn’t only easy but the simplest to do, too.
If you have an existing account with a bank, you can open a new savings account. Then, set up an automatic money transfer so that you wouldn’t forget putting money on that new account. Rest assured that the money that you put into an account is well-secured and protected by the appropriate agencies.
Another option that you can consider is a high-yield savings account. Just as what the name implies, this type of account pays considerably higher interest rates. That is in comparison to ordinary savings account that everyone has.
This option suits those who are fond of doing their financial transactions online. You can easily transact through the bank website or directly from their app instead of going to the bank and doing it manually. You can even monitor the interest rates online. You can easily compare it with the possible earnings that you can get from the other investment options available with your bank.
Saving money for a down payment is one of the first things that you need to think about when buying a house. So, before you start your house hunting, make sure to have your savings beefed up first to reduce any the chances of delay. Also, with huge savings, you will feel more confident to take one of the most important decisions in your life. Purchasing a home is a lifetime purchase, after all.