Deposit saving strategies for the self-employed
If you’re self-employed and your income varies each month, saving for a home can be a real challenge. One way to demonstrate you’re a good candidate for a home loan is to show lenders that you have a history of regular savings. Here are five strategies to help maximise your ability to put aside money.
1. Save during the prosperous months
When business is booming and you're earning more cash, it’s tempting to reward yourself for the hard work, however It is important not to lose sight of your bigger goals. Do some research on saving accounts that give you some bonus interest and try to set aside that extra cash!
2. Set a home deposit goal
Work out how much you need to save for a deposit in your desired suburb and add on those extra costs like stamp duty and legal fees. The type of fees charged by lenders may be different depending on the product you‘re applying for. Although it’s possible to secure a loan with a 5% deposit, aim to save 20% of the property value to avoid paying lenders mortgage insurance (LMI).
3. Smart tax deductions
If you're self-employed, you may be able to claim income tax deductions for expenses related to your business. These can add up significantly and help you save towards a deposit for your new home. Expenses you can claim may include home office expenses. Speak to your qualified tax accountant to get more information about what you can claim expenses on. Using a tax accountant can be a worthwhile investment, as they know what you can claim for and can help you get the best tax return.
4. Save a percentage of your pay
When your income streams are irregular, it can be tempting to only put money aside when you receive large payments. But a little discipline can go a long way. Your personal budgeting rules may put you on the right track towards saving for a deposit! Whether your income is big or small, you can be sure that you’re saving each time you are getting paid and working towards your financial goals.
5. Protect your income
Should you be in a situation where you are unable to work due to an injury or illness, income protection insurance may help cover for the income lost during that period which means you won’t be using your house savings for daily expenses. It’s important to do intensive research before purchasing personal life insurances.
To find out more about the home loan options that could work for you, get in contact with your friendly and trusted Mortgage Broker today!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.