Your home loan deposit is a contribution to the purchase price of the property you are looking to buy. Your home deposit will decide what type of home loan you can secure and the amount you are eligible to borrow from lenders. Mortgage brokers can help you secure the best home loan deal at competitive interest rates.
What is the minimum deposit required to buy a house?
Generally, you need to have at least a 20% deposit to buy a house. However, there are some government grants available that can help you secure your home with low deposit requirements. To apply for that government grant, you have to meet certain requirements.
- 20% deposit: Usually, you must have at least 20% house deposit to avoid LMI. This simply means a maximum LVR of 80%. You may also be wondering: can I buy a house with $10,000 deposit? Well, this depends on the price of the property.
- 5% deposit: Eligible first-home buyers can buy a house with only a 5% deposit. It is also the minimum house deposit required for many available government grants, such as the First Home Guarantee and the Regional First Home Buyer Guarantee.
- 2% deposit: If you are eligible, you may be able to purchase a home with only a 2% deposit using the Family Home Guarantee with no LMI. However, this scheme is only for single parents who meet certain requirements.
How much deposit you must have with a guarantor?
With little to zero house deposit with a guarantor home loan, you can buy a house. With a guarantor home loan, a family member can use their home equity as security to help you secure a home loan. It’s crucial that your guarantor should be a homeowner and must have enough equity to help you secure a home loan. They can secure a portion of your loan—typically around 20%—to lower your loan-to-value ratio (LVR) to 80% and avoid lenders mortgage insurance (LMI), or they can guarantee the entire loan amount.
How to choose the right repayment frequency?
You may not realise that choosing the right repayment frequency can make a huge difference in interest. You may be wondering: paying the mortgage weekly vs monthly vs fortnightly. With weekly repayment, you can pay your home loan faster, but it is possible if you can afford to repay the borrowed amount weekly. On the other hand, repaying a home loan fortnightly can minimise the number of years it takes to pay off your mortgage. If you are getting paid every month, then it would be better to stick to monthly repayments. It depends on your financial circumstances to decide on the repayment frequency. You can ask a mortgage broker if you are willing to change the repayment frequency.
How can government grants help you save on house deposit?
The home guarantee scheme supports eligible home buyers to purchase a property with only a 2%-5% house deposit. Here are a few other programs that come under the home guarantee scheme:
- First Home Guarantee: For eligible first-time home buyers to purchase a house with only a 5% deposit without LMI.
- Regional First Home Buyer Guarantee: Eligible first home buyers can buy a house with a 5% deposit with no LMI.
- Family Home Guarantee: Eligible single parents with at least one dependent child can buy a house with only a 2% deposit with no LMI.
First Home Owners Grant: Most states and territories in Australia offer first home owners grants to eligible first home buyers to help them save for a house deposit. If you are taking out a home loan through the best mortgage broker in Melbourne, ensure that you get more information on FHOG to benefit from this scheme.
Conclusion
If you are looking to buy a house, you will be thinking of house deposit requirements. House deposit requirements may vary according to your financial circumstances, the type of home loan you are taking, and if you are eligible for any government grant, then you could save on house deposit. For more information on house deposit requirements, you can book an appointment with mortgage brokers at Star Homeloans.