Home loan deposit

Understanding Your Home Loan Deposit with OzBroker

How much should you save for a home loan deposit?
When you decide to buy a home, the home loan deposit becomes your initial contribution to the property’s purchase price. This deposit not only plays a pivotal role in securing your dream home but also influences the type of loan you might qualify for and the borrowing amount. Typically, a 20% deposit is ideal. However, your home loan deposit might also be assembled with:

  • The First Home Owner Grant (FHOG)
  • Having a home loan guarantor
  • Receiving a monetary gift

The FHOG often becomes a sensible option for your deposit, especially when purchasing your first home. However, it’s crucial to stay informed about changing rules as you navigate through your property buying journey.

Why is the Size of Your Home Loan Deposit Crucial?

  • Affordability Insights: Your consistent savings, regular rental payments, and investments illustrate your financial discipline, giving lenders confidence in your repayment abilities. Lenders also evaluate your income sources, like salary and dividends, to gauge the amount they could lend you. Check out our borrowing power calculator for a general idea of your potential borrowing amount.
  • Interest Rate Influence: Your available deposit at the time of applying for a home loan can affect your loan’s interest rate. A substantial deposit not only enhances your negotiation power with lenders but might also earn you a discounted interest rate.
  • Risk Factor & LMI: Lenders assess your risk level using the Loan to Value Ratio (LVR), examining the amount you wish to borrow against the property’s value. A higher LVR often translates to higher risk. If your LVR exceeds 80%, you might need to pay Lenders Mortgage Insurance (LMI). There are alternatives to LMI, such as utilizing a family member as a security guarantor.
  • Interest Savings: Remember, borrowing less means paying less interest throughout your loan’s lifespan. A significant home loan deposit leads to notable savings over time.

Leveraging the First Home Owner Grant

The FHOG can substantially boost your home purchase budget if you’re eligible. It can also potentially help you evade LMI if your genuine savings and the FHOG total at least 20% of your property’s value. However, note that the FHOG won’t be paid until the construction stage if you plan to build a new home, so it can’t assist with land purchases. Our team at OzBroker will help you navigate through the FHOG application, ensuring you’ve appropriately accounted for all factors in your purchase plan. Determine your eligibility with our First Home Owner Grant Eligibility Questionnaire.

Components of Your Home Loan Deposit

  1. Genuine Savings: Demonstrated by consistent deposits into an account over at least three months, genuine savings act as proof of your capability to manage regular home loan repayments.
  2. Investments & Other Assets: Apart from regular deposits, lenders may acknowledge various assets as genuine savings, such as term deposits, shares, gifts, inheritances (all held for a minimum of three months), or equity in other properties.
  3. Monetary Gifts: Monetary gifts from family might become increasingly common to aid property market entry. Lenders will seek assurance that this is a non-repayable gift through a statutory declaration. The gift may need to be in an account for a stipulated period, depending on the lender’s specific requirements.
  4. Rental Payments: Your rental payment history might qualify as genuine savings with some lenders, under specific conditions. Your OzBroker mortgage broker will closely work with you to find lenders that cater to your unique financial situation and provide a loan fitting your needs.

Take the First Step with OzBroker

Embarking on your home-owning journey might seem daunting, but with OzBroker, you’re not alone. We’re here to unravel the complexities of home loan deposits and guide you through every step, ensuring a smooth, understandable, and transparent process. Our expert brokers meticulously evaluate your individual circumstances, connecting you with lenders and opportunities that align with your financial landscape.

So why wait?

Discover how you can step into your dream home with a solid financial plan backed by OzBroker’s unwavering support. Begin your journey with us today and unlock the doors to your future home seamlessly, confidently, and wisely.

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