Looking to purchase a home with less than 20% deposit?

Feeling like the property market has gotten away from you? Despite housing prices, we are still comparatively in a very low interest rate period, so purchasing is still a sensible path for many. 

I wanted to break down a few minimums for you to get into the market if you have been saving and feel the time is right. 

Say you’re a first home buyer and you’ve managed to save $30-35,000. Did you know that you can purchase a property worth up to around $600,000? There are lenders who will let you borrow with only a 5% genuinely saved* deposit, not the 20% deposit you might think is absolutely required. 

Yes, you will need to have Mortgage Insurance**, but this can be capped into the loan.

Further, as a first home buyer there is no stamp duty payable – making this transaction possible with just the $30-$35000 we originally mentioned. 

If you have already purchased a home, you are still able to borrow up to 95% of the property’s value but you WILL need to pay stamp duty, which pretty much doubles the amount of savings required - taking it to nearly $70,000. 

As such, I still think that if you are a first homebuyer with savings available, it is still far more beneficial to get into your own home in the current market. 

*Genuine Savings are savings where the accrual of funds can be tracked over the last 3 months at minimum.
**Mortgage Insurance is a policy the bank takes out to protect their equity in your home. 

You pay the premium for the policy and the cost is generally 1-3% of the loan amount. Mortgage Insurance is required for all loans where less than 20% of the purchase price is available for the purchase.