November 17, 2017
It seems like it could take a lifetime to save for a home deposit, and the thought of saving that much money can be daunting. There is good news though - you might be closer to purchasing a home than you think!
How much deposit do I need to save to buy a house?
At Mortgage Choice in Kingscliff, many of the banks and lenders on our panel will let you to borrow up to 95% of purchase property's value. Meaning that you will only be required to supply a minimum of 5% as a deposit when purchasing an owner-occupied home.
This 5% generally needs to be 'genuine savings', which means that it's money ready to go, and you'll need to provide a three month history of where it came from. It often also can't include any gifted money, unless you have had it in your account for more than 3 months. But it's a good option for those who already have some money saved up.
Some of the Mortgage Choice panel's lenders and banks will also allow you to borrow without genuine savings - if you have a steady rental history. However you will still need at least 5% deposit but this can come from options such as a gift from the first home owners grant or family.
Another great option to consider, is a guarantor. Having a family member use their own home equity as security for your loan, and therefore you will not need to provide a deposit. However you will need to be able to service the loan (making the repayments) for the entire loan amount of purchase price, plus any costs.
Why was I told I need 20%?
Generally, several lenders on the Mortgage Choice panel will allow you to borrow over 80% of your property’s value. However, you will need to pay Lenders Mortgage Insurance (LMI) for the privledge. LMI is a type of insurance that protects the lender, but unfortunately provides no protection for the buyer.
Lenders arrange the insurance and you will need to pay in a one-off charge. Some lenders do allow you to add this onto your home loan to pay it off, and other lenders will require you to pay it upfront. It's worth taking into consideration that your LMI will be higher, the lower your desposit is.
Are there additional costs to purchasing property?
Extra costs are often present when purchasing a home. These can include stamp duty, legal fees and establishment fees. Costs such as these can differ from loan to loan because they are due things like the lender, solicitor or building and pest companies chosen. However it's worth chatting to our Kingscliff mortgage brokers as there are many fees that we can negotiate down on your behalf with the lender.
First home buyers are also exempt from paying stamp duty in Queensland, which can save you quite a bit! It is important to remember that you will need to have the money to pay for these events on top of your required savings.
Contact us to see how close you are to being able to purchase your home. Call Jo direct on 0425 293 453 or simply click on the Book Now button to make an online booking.