Tue 17 Oct 2023

Buying a First Home- How much deposit is required?

Buying a First Home- How much deposit is required?

Knowing the amount of deposit required is the biggest dilemma faced by First Home Buyers. Understanding of what allows lender’s gain confidence in you could mean that the lenders see you as a low-risk customer and it can increase the likelihood of your loan being approved.

 

Bigger the Better

Ideal deposit of 20% allows banks to determine your savings pattern and stability and hence they do not pass on the cost of Lenders Mortgage Insurance to you (Lenders Mortgage Insurance is a one-off premium which provides protection to your home loan lender in the event  that you default on your home loan) and which could enable you to save on LMI.

What happens if you have less than 20%

Some Lenders will consider lending to the buyers with as little as 5% deposit. This may depend on various factors. To Qualify you need Strong income, Genuine savings, Clear Credit History, Minimal debts, Stable employment, Good asset position                                                                                    There are exceptions to the above rule with the commercial properties, small apartments, in high–density areas etc. In such cases, the lender will still require a 20 % deposit unless you can provide a guarantor loan or deposit protect bond.

 

While Budgeting, keep in mind the additional costs like Stamp duty (land transfer duty) (depending on which state you are )Loan application fees, conveyancing, Building and pest inspections as well as home and contents insurance etc.

A Mortgage Broker can Make this Process easier for you. If you need assistance for your Home Loan and want to find out what you qualify for please contact me on 0430340443 for a non-obligatory service

 

A disclaimer -Your full financial situation will need to be reviewed prior to acceptance of any offer or product