How Much Deposit Do I Need?
In Australia, most lenders require you to have a deposit between 10 and 20% of the purchase price of your home. For example, if the home you want to buy costs $300,000, you’ll need to have a deposit of between $30,000 and $60,000. However, most lenders will want you to have a 20% deposit to avoid paying lenders mortgage insurance.
Even with this standard, how much deposit you need for your home loan depends on your lender and your situation. Some lenders will allow you to borrow 95% of your property’s value. In addition, if you are a first-time homebuyer, you may be able to get a grant from the government to count towards some of your deposit.
Tips on Saving for a Home Loan Deposit
Saving for a deposit takes time. Therefore, it’s essential to know how much you need to realistically save and develop a plan to help you reach your goal. Here are some tips:
- Plan a budget. A budget can help you track expenses and income, how much extra money you can set aside towards your home deposit every month, and areas you can cut back on your spending.
- Automate your savings. Transferring your money into a savings account every time you get paid helps build your account without remembering to set money aside.
- Invest some money. Investing in shares or a managed fund can help your savings grow in just a few years. However, we recommend talking to a financial advisor before you invest, so you understand the risks.
If you are in the process of saving for a deposit, the brokers at Mortgage House can help you determine how much money you need to set aside and save for your deposit. We can also help you apply for a low deposit and no deposit home loans with competitive interest rates.