Buying your first home is a huge milestone and one that deserves to be celebrated. Whether you are purchasing a family home that you will enjoy for years to come, a smaller unit, or an investment property, it is a big commitment to your future. Of course, house hunting can also be extremely stressful. Between trying to find a place that ticks all your boxes (likely with a little leeway) as well as bidding against other people who are interested in the same place, it can become a tedious venture.
But one that will pay off over the years, so it is well worth pursuing. That said, you need to be able to afford both the deposit and the ongoing monthly home loan repayments before even heading down this route. This beds the question: how much deposit do I need for a home loan?
How Much Deposit Do I Need For A Home Loan?
The largest hurdle when it comes to purchasing your first property is getting your deposit and other upfront costs together for the purchase. So, how much deposit do I need for a home loan? This number is dependent on a few factors.
If you are thinking about buying a house, the first thing you need to do is take an overall look at your financial situation. Knowing your income and expenses and what you already have saved up is a good guide when it comes to estimating the amount you will be able to borrow from a financial institution.
It’s important to recognise that interest rates change all the time. If you choose not to lock in your mortgage with a fixed interest rate (meaning that it won’t change) and instead opt for a variable interest rate, then you need to account for rises in the rate and whether you will still be able to make repayments if this occurs.
What Other Costs Are Involved?
When it comes to taking out a home loan, there are more costs to think about than just the deposit. Here are some of the other costs that are involved when it comes to buying a home:
- Conveyancing and legal costs.
- Government fees, such as stamp duty. This can also be included in the loan to save you upfront costs.
- Title search and registration fees.
- Pest and building inspections.
- Building and contents insurance.
How Much Deposit Do I Need For A Home Loan?
With an understanding of all the different costs that are involved when it comes to buying a home, we can revisit just how much you should consider saving for the deposit. Typically, a 20% deposit or down payment, is required when you purchase a property.
Knowing this may affect the price bracket you are looking in when it comes to purchasing your home. It is a good idea to have a look at what you have saved. From there, you can work out how much you can afford to put down up front, and what this means in terms of future repayments. You don’t want to overextend yourself and find yourself in a position of defaulting on loan payments. The best idea is to work out the costs upfront before you even begin looking.
Naturally, not everyone has this amount saved before buying there home, and there are a number of different routes you can take if you find yourself in this position.
- Family security guarantee: this is where your parents or family member uses their available equity on their own home loan to help you purchase yours. They act as guarantors until your property raises enough equity of its own, or you can pay them out.
- First homeowners grant: if you are a first-time homeowner, then you may be eligible for the First Home Owner Grant scheme. This makes one-off grants to you when purchasing your first home and can help to cover the costs.
- Getting a home loan with bad credit: this is a third option available to you if you find yourself in a position of bad credit. Instead of forgoing the home altogether, consider taking out a home loan with bad credit to help you out.
Getting A Home Loan
Now you understand how much deposit do I need for a home loan, you may be wondering how to go about securing yourself a home loan. The team at NSW Mortgage Corp will help to find you a leading home loan on the market that suits your situation and your needs.
Our goal is to save you as much money as possible to make sure you are getting the most out of your home loan. If you are going down the path of buying your first home, then consider getting on board with a lender who has your best interests at heart. Contract NSW Mortgage Corp today to get started.
