How much deposit do I need?
A deposit of 20% or more will help you avoid paying Lender’s Mortgage Insurance (LMI), however you can still get a home loan even if you do have a limited deposit. The total amount of your deposit will affect the types of loans and lenders that are available to you, but there are options to cover every situation.
First Home Owners’ Grant increases deposit options
First home buyers borrowing up to $300,000 could complete their purchase by using the First Home Owners’ Grant of $7000, plus any state-based assistance schemes in combination with a small deposit and a 90 and 95% home loan. Talk to your mortgage broker for more information.
Maximise your deposit
Your Loan Market mortgage broker will help you to maximise your deposit and make securing a home or investment loan at a competitive interest rate easier than you think. Fill in the form for a complete, confidential review of your deposit options or call us at any time on 13 LOAN or direct on +61 2 9249 3739.
Along with your deposit, you will also have to pay the standard fees and charges associated with your home purchase. If you don’t have all of the additional funds for fees and taxes, there are ways to also cover some or all of the fees and your mortgage broker should be able to show you your options when you are sorting out your home loan.
How much can I borrow?
How much you can borrow (your borrowing capacity) will depend on many different factors, including but not limited to: income, credit history, income history and employment history. For a guide to how much you can borrow, check out our mortgage calculators but remember, before hitting the open home circuit, it is worth obtaining an official written home loan pre-approval from your chosen mortgage lender so you know exactly how much you can borrow.
90-95% home loans
Most lenders will now allow you to borrow between 90% and 95% of the property value at their regular interest rate terms, provided you have the required genuine savings and can prove you can service the loan. Some may also allow you to capitalise your Lenders Mortgage Insurance costs. For the most common low deposit home loan, this effectively takes your borrowings to around 92%.
100% or no deposit home loans
100% loans are ideal for those who have a good income but have been unable to save a deposit, for whatever reason. A true 100% loan allows you to borrow 100% of the purchase price of the property, provided you are able to cover associated purchase costs and service the loan repayments, but these are unavailable in the current economic climate. When available, loans advertised as 100% loans actually cover around 97% or the property value and the rest covers your Lenders Mortgage Insurance (LMI). They may have slightly tougher approval rules, and you may also be a bit more limited in your choice of loans.
First Home Owners’ Grants
If you are a first home buyer and are eligible for the grant you may be able to use some or all of your First Home Owners’ Grant as part of your deposit. Your local mortgage broker can provide further information on the grant, and assist you with your application.
First Home Saver Accounts
The federal government introduced First Home Saver Accounts in 2008. The accounts, offered in addition to the First Home Owners’ Grant and any state-based first home buyer grants and concessions, provides deposit saving support for first home buyers through a number of financial institutions.
Fees and charges
There are a range of fees and charges you may need to cover when purchasing property. These include:
Bank/Lender fees:
- Loan Application Fee
- Valuations
- Conveyancing/Solicitors’ Fees
- Stamp Duty
- Lenders Mortgage Insurance (LMI)
In some cases, the above fees may be covered as part of your home loan application. Check with your mortgage broker which fees you will need to cover.
Other related fees:
- Building and Pest Inspections
- Insurance – building, contents, landlord protection, transit etc.
You can find a detailed description of the fees and charges you are likely to encounter in our comprehensive Fees and Charges section.
For more information on your home loan deposit options
If you have a savings goal or property purchase in sight, it pays to talk to a mortgage broker who understands both the first home saver scheme and can help you understand what your home loan options are as well as set up your savings scheme with the right bank for you. Alternatively you can call at any time on 13LOAN (International direct line: +61 2 9249 3739) and we will have a broker in contact with you within 2 business hours.
