To get a home loan, you will need a deposit.
That is a chunk of your own money that you will put towards buying your property.
You can’t get a loan in Australia unless you have a deposit of at least 5% of the property’s value.
But many of the best value lenders will require a larger minimum deposit of 10%.
That means that if you are buying a house worth $300,000, you will need a $30,000 deposit.
If you have more, that is even better because the more deposit you have, the less risk you are to lenders.
This will encourage them to give you a cheaper interest rate.
Having a larger deposit will also reduce the amount of Lender’s Mortgage Insurance you have to pay.
This insurance, which protects the lender, can amount to a lump sum of 2 per cent or more of the property value if you only have a small deposit.
But the cost of Lenders Mortgage Insurance falls as your deposit grows and if have a deposit of 20 per cent or more, you can often avoid it altogether.
Remember you will also have to have money available for stamp duty and conveyancing fees – you can use our home loan calculator in the tools section to get a clear idea of the total cost of buying a property.
Get calculating and good luck with your savings.