Smart savings strategies for first-home buyers in 2025

For first-home buyers in 2025, saving for your first property can feel like climbing a mountain. With rising property prices, changing economic conditions, and an ever-evolving housing market, having a smart savings strategy is more important than ever. Here are three proven approaches to help you get closer to your dream home: building a deposit, exploring rentvesting, and leveraging parental guarantees or co-borrowing arrangements.

1. Building a deposit

Saving for a deposit is the cornerstone of buying your first home. Here are key strategies to help you build one faster:

• Set clear goals:

Determine how much you need for your deposit. Typically, lenders require at least 5% of the property’s value, but saving 20% can help you avoid paying Lenders Mortgage Insurance (LMI).

• Automate your savings:

Set up a dedicated savings account and automate regular deposits from your income. Consider high-interest savings accounts or offset accounts to grow your funds faster.

• Budget strategically:

Cut unnecessary expenses and track your spending. Small sacrifices like dining out less or reducing subscription services can make a big difference over time. For help managing your budget, check out MoneySmart’s budgeting tool.

• Take advantage of government schemes:

Explore programs like the First Home Super Saver Scheme (FHSSS), which allows you to use your superannuation to boost your deposit savings. Read up on government schemes for first-home buyers here .

2. Rentvesting: an alternative approach

If saving for a deposit in your dream suburb feels out of reach, consider rentvesting. This strategy allows you to buy in a more affordable area while continuing to rent in your preferred location.

• Benefits of rentvesting:

This approach lets you enter the property market without sacrificing your lifestyle. Rental income from your investment can help offset mortgage costs, and you may also be eligible for tax benefits, including deductions on property-related expenses.

• Key considerations:

Research high-growth suburbs where property values are likely to appreciate, and factor in the costs of maintaining an investment property, including property management fees.

Consult with a financial advisor to ensure rentvesting aligns with your long-term goals and for more information read our blog.

3. Leveraging parental guarantees or co-borrowing arrangements

If saving for a deposit is still challenging, leveraging family support can be a game-changer. Here’s how:

• Parental guarantees:

Parents can use the equity in their property as security for your home loan. This reduces your need for a large deposit and helps you avoid LMI.

Key considerations:

A parental guarantee doesn’t mean your parents are paying your mortgage; it’s simply added security for the lender. Ensure both parties understand the risks and seek legal advice before proceeding.

• Co-borrowing arrangements:

Consider purchasing a property with a family member or friend to share the costs and responsibilities.

• Benefits of co-borrowing:

The shared financial responsibility makes saving and repaying the loan easier.

It also allows you to enter the market sooner and potentially afford a better property.

Caution:

Clearly define each party’s rights and obligations in a legal agreement to avoid conflicts down the road.

Final thoughts
Buying your first home in 2025 may feel daunting, but with smart savings strategies, it’s absolutely achievable. Whether you’re building a deposit, exploring rentvesting, or leveraging family support, the key is to create a plan that aligns with your financial situation and long-term goals.

If you’d like more information on any of the topics above or want to explore your home loan options, contact a Nectar broker today and let’s help get you on the property ladder!