Home Loan Deposit - How Much Is Enough?
Just as there is no such thing as a free lunch, the no deposit home loan is now a thing of the past.
Well then, you say, how much deposit do I need for a home loan?
In general, you will need to pay a minimum five per cent of a property’s purchase price up front. Yet there can be advantages to saving even more for your home loan down payment.
Most obviously, the more money you put down as a deposit, the less you will have to borrow. That means less interest to pay and the possibility of getting mortgage-free quicker.
What’s more, if you are borrowing more than 80 per cent of the value of a property, you may be required by your lender to pay lender’s mortgage insurance.
This provides financial protection for the lender in the scenario that you are unable to meet your loan repayment obligations.
As you can see, although the most feasible route may be to save the minimum deposit required, it can save you more in the long run to put down a bigger amount on your loan upfront.
To get more detailed information on your situation, talk to a Loan Market mortgage broker today.