How much deposit do I need?

One of the most common questions I get asked from first home buyers, is how much deposit do I need to have?

Well, the answer is as follows. Banks do vary with their minimum expectations, however most lenders require the customer to have a minimum of a 5% deposit plus enough money to cover their costs. More on costs later. This means in simple terms if you were to purchase a property for $100,000 you would need to have $5,000 plus costs.

Now lets explore costs. When you purchase a property, you will have associated costs that you will need to pay. These costs include, but are not limited to:

• Government stamp duty (dependent on which state you buy in)

• Transfer of Land fees

• Solicitors/ Conveyancers costs

• Mortgage Registration Fees

• Bank fees

• Lenders Mortgage Insurance

These fees are calculated by your lender in conjunction with your Solicitor/ Conveyancer and government requirements. Your trusted professionals will be able to help you with these costs.

Lenders Mortgage Insurance is payable when you lend more than 80% of the purchase price of your property. Lenders Mortgage Insurance is an insurance policy that you pay, but covers the bank in the event that you default. The reason it is payable when you borrow more than 80% of the market value of your property, is because the lenders deem you a higher risk and therefore require Lenders Mortgage Insurance to protect their interests.

There is more to know about purchasing your first home, but this will act as a general guide on how much deposit you will need to get you started. For more information contact Jackie today on 0409 563 892 or Jackie@fimafinance.com

Please note this information is general in nature only, and does not take into consideration your personal situation.