How much deposit will you need?
To get your first home loan you will need to put up a deposit, cover up other costs and fulfil other requirements from the lender. Our expert mortgage broker will clearly explain your options and suggest the best way to move forward.
Genuine savings
Money paid into an account for at least a three month period is considered as genuine savings. This is viewed as evidence by the lenders that you have the capability of making regular repayments on a home loan. Most lenders will accept at least 5% of the purchase price of the property as deposit. But you should consider paying a larger deposit if you can because it will have an impact on your interest rate, whether you will have to pay Lenders Mortgage Insurance (LMI) and the overall interest you pay over the duration of your mortgage.
Taking other home buying costs into account
There are a number of fees involved when buying a property. We will advise you regarding the associated costs of a home loan which can include:
1. Stamp duty
2. Legal/Conveyancing fee
3. Application or establishment fee
4. Building inspection
5. Pest Inspection
6. Settlement fees
7. Mortgage Insurance
8. Mortgage registration
Your borrowing amount will be the difference between the house price plus these costs and the deposit you have. Once you have a clear idea of the associated costs then you will be able to save accordingly and avoid surprises when you decide to buy your first home.
Our expert broker will clearly breakdown all these costs for you so that you can take an informed decision on the price you will be willing to pay for a house and your borrowing amount.
LMI (Lender Mortgage Insurance)
In case you do not have a 20% home loan or in other words need to borrow more than 80% of the home purchase price then you will be required to pay Mortgage Insurance (LMI) to the lender. This is a one-time payment which is used by the lender to protect themselves if you default on your loan.
Generally LMI is calculated as a percentage of the mortgage loan. In most cases you can include it in the total borrowing amount or you may choose to pay it at the settlement of the loan. Your trusted broker will discuss all the options with you before advising you based on your situation. But keep in mind that if you can put up a deposit of 20% or more then you will be able to avoid paying this significant sum of money.
Maintaining good credit record
A credit report holds a complete summary of your credit history. The report typically collects information from lenders, telecommunications utility companies to assess your ability to repay any debt and your risk as a debtor.
After receiving your application lenders might approve or deny it based on your credit record. Also they might take the record into consideration while calculating the interest rate of the home loan. Our expert broker can give you invaluable advice regarding maintaining your credit record as well as give you tips to improve your scores if there are any blemishes.
Tips for quickly building your deposit money
Create a budget and stick to it
Creating a budget will help you look at all your expenses and find out the ones which can be cut down.
Leave out the extras in your life
Try home cooking, find out cheaper entertainment options and look for bargains during shopping. All of these will add up and can save almost $400 a month.
Take a part of your payment directly to your savings account
This will ensure that you do not get tempted by readily available cash in hand and a fixed amount is saved each month.
Add all extras to your savings
You should add part or all of your bonuses, monetary gifts and tax refunds to your deposit pool to make it grow faster.
Save money in an interest bearing account
Maintain a separate account for your deposit money from which make little or few withdrawals. This will allow you accumulate savings with the best possible gains on your wealth.
Close some of your credit cards
Closing some of your credit cards will help you to reduce your debts as well as prevent impulse buying episodes. Even reducing the limit of some of your cards might help you achieve your goal faster