How much do I need for a Home Loan deposit?
It all boils down to:
- How quickly you can save, and your desire to be in your first home sooner: So, what is the minimum deposit for a home loan? The figure of 20% being required for a deposit is a common one, but lenders across the country will usually accept a deposit somewhere in the vicinity of 5% to 25%. Of course, if you’re comfortable to wait until you have 20% of your purchase price saved, by all means go for it – you’ll be a more attractive prospect for many lenders. However, if you’re desperate to have your own place sooner, there are options available to you.
- What your lender will do in terms of a deposit percentage: Different lenders will accept varying deposit amounts when applying for a home loan. For example, at Greater Bank, we’re able to accept deposits as low as 5%, however in situations like this, you may be required to purchase what’s known as Lender’s Mortgage Insurance (LMI). For more on LMI, see below. We also get asked a lot – “Can I get a home loan without a deposit?” and another option that may be open to would-be buyers looking to get into the market sooner is our Family Pledge Loan. In situations where a potential buyer isn’t able to save the full 20% deposit amount, they may be able to use equity in a parent or guarantor’s property to secure their own home loan. For more on our Family Pledge Loan, click here.
- Whether you’re prepared to accept LMI: LMI is basically a one-off payment you make when you’re unable to save the full 20% deposit amount for your home. It protects the lender in the event you become unable to meet your loan repayments and default on the loan at any point. The amount you pay in LMI is linked to your saved deposit amount – the smaller your deposit percentage, the larger the amount you pay in LMI. The good thing is, however, that at Greater Bank, you are able to include your LMI payment in the total cost of your loan, meaning you can repay it over time in addition to your loan repayments, and get into your new place sooner.