Buying a house also means getting a home loan and a mortgage is a big (and expensive) commitment that comes with a 30-year term, but it also comes with a unique set of rewards.

In most cases, buying your own place means not having to pay rent. Or, it could be a chance to move out of your parents’ home. Either way, it’s going to mean having enough savings to use as a deposit towards a property you can afford.

If you’re considering buying a house in five years, here’s how to start saving.

1. Set a goal, and determine how much you’ll need to save

Setting a clear goal on how much you need to save for your first home will help you plan a timeline. Determining how much you need to save largely comes down to weighing three costs associated with property purchases.

First, consider how much you can afford to borrow, this will help you determine the price you can afford to pay for a property. Most lenders require a minimum deposit equalling 5 percent of the property price. The price of the property you can afford will be your borrowing capacity plus your savings (assuming you can save the minimum 5 percent).

Next, factor in what cost you will incur as part of your purchase. Most state governments have stamp duty waiver programs however, average property prices in east coast capitals tends to be above the waiver threshold. Meaning, you should factor statutory cost into the amount you need to save for your first home.

Lastly, think about other cost you are likely to incur when purchasing a property. Examples of these cost are your conveyancers fee plus relocation cost plus incidentals such as building and pest inspections. These could easily add up to $5,000 extra in saving that you need to accumulate.

2. Refinance and/ or close consumer debt

If you still have personal loans from when you bought you car, you might find that interest rates have dropped since you took that loan. Refinancing will essentially replace your current loan with a new loan, which has a lower interest rate. This could help you free up a few extra dollars in your budget each month to put towards your home loan deposit.

If you have a ‘Buy Now Pay Later’ account, refinancing may not be the best option. The best solution is to make your 4 repayments on the nominated periods and close these facilities for good.

3. Decide the right place to start saving

There are plenty of ways to save for a home loan, ranging from a typical high-yield online savings, term deposit account to a stock market investment strategy. The right place to save will really depend on the timing of your plan and the level of risk you are willing to accept.

For someone who’s certain on their timeframe, opting for lower-risk investments like Term Deposits or keeping your deposit savings in an online high-yield savings account are typically the best ways to build your savings.

It's better to give up expected stock market investment return to have the money available when you want to buy your house than to miss out because you invested too aggressively and made huge capital loses. 

4. Check for state government assistance on offer

It’s worth finding out if your state or territory government has any grants or stamp duty waiver programs on offer for first home buyers.

While there may be some restrictions, like, grants only available for new builds. It’s wise to check with your state revenues department what benefits are on offer and what eligibility criteria apply.

Tell us: Enjoyed this article? Don’t forget to like and share.

And while you’re here, take our mortgage shredder challenge and discover how much you can save on your home and investment loans by using loansHub technology as your personal mortgage manager. To discover why loansHub and what we do, click here.

This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.