How Much Deposit Do You Need to Buy a Home in Australia?
Why Does Your Deposit Matter?
Your deposit is the amount you contribute towards purchasing a property rather than borrowing from a lender.
A larger deposit generally means you need to borrow less, which can reduce the size of your home loan and potentially lower your repayments.
For example, a 20% deposit on a $700,000 property would be $140,000, before considering other purchasing costs.
Is a 20% Deposit Required?
Not always.
Some lenders offer home loans to eligible borrowers with deposits below 20%. However, borrowing with a smaller deposit can result in additional costs.
One important consideration is Lenders Mortgage Insurance (LMI), which may apply when borrowing above certain loan-to-value ratios.
Other Costs to Consider
Your deposit is not the only cost involved in buying a property.
Buyers may also need to budget for:
- Stamp duty
- Conveyancing and legal fees
- Building and pest inspections
- Loan application fees
- Moving costs
- Lenders Mortgage Insurance, where applicable
Having enough money for the deposit is important, but buyers should also make sure they have considered the other costs associated with purchasing a property.
Building Your Deposit
Saving a deposit can take time. Setting a savings target and understanding your borrowing capacity can help you plan your purchase.
A larger deposit can reduce the amount you need to borrow, but the right amount depends on your financial circumstances and purchasing goals.
This article provides general information only and does not take into account your individual financial circumstances. Consider seeking professional financial advice before making a lending or property decision.
