Deposits

The Deposit you place for your home will be the biggest property buying expense. The amount that you need to deposit depends on yourself, the property and the lender.

There are many different circumstances that enable you to place a lower or higher deposit. Firstly, the deposit is determined in a percentage of your proposed properties purchase price.

Generally, lenders prefer a deposit of at least 20% of the property value, which also allows you to avoid the LMI (Lenders Mortgage Insurance) fee - therefore your LVR will land at 80% which is generally the maximum.

However, Lenders will consider a deposit lower than 20% and apply the LMI fee - which isn’t unusual. Although the Lender will be slightly stricter in terms of allowing you to borrow - meaning as a Borrower you would want to save the largest deposit possible before applying for a Home Loan to increase your chances.

The higher your deposit, the less you will need to borrow - meaning you’ll likely pay less interest and your repayments could be lower too.

Set a budget, and do your best to save high - however lenders are open to taking deposits lower than 20%.

The lower your deposit, the trickier it can be for a lender to approve your loan - however if the borrower has a stable income and a healthy financial situation, you can get sensible Home Loan with a 10% deposit.

As mentioned before, in most circumstances, LMI will be applied for a deposit lower than 20%.

There are Home Buyers that go ahead with this if it means there is a good opportunity and it’s worth it - after all you can typically make extra Home Loan repayments on a Variable Rate to pay down the LMI fee faster.

Common with First Home Buyers, you could also receive a non repayable gift, typically a family member, and use this to assist a higher deposit.

Lastly, you can always try to apply a guarantor (family member or friend) to offer the equity in their property to secure the Mortgage.