If you’re a first home buyer looking at current property prices, you may be left thinking if you don’t take the opportunity to invest now, you never will.

But here’s the truth.

In today’s market, how much you actually need for a house deposit really depends on a number of factors. This may include things like what you can afford to borrow and the amount of debt you’re comfortable with taking on.

Let’s break this down simply.

Here’re 5 key things you may want to consider when it comes to your house deposit.

What/where you’re looking to buy

 It’s worth thinking about the areas and the type of property you’re considering buying, as this will affect how much you’ll need for your house deposit.

A great way to do this is to check out what homes are selling for in your preferred areas. You may also want to consider other things such as market trends and the suburb’s statistics.

Another great way to get a feel for what’s selling is to attend auctions as you may be able to get insights from other bidders about the area.

 What lenders are willing to accept

 Unfortunately, there’s no easy way to answer this.

Banks’ lending criteria depends on a number of things such as, your employment history and income, savings and credit history as well as evidence that you have genuine savings.

Some banks may be more lenient than others when it comes to these requirements and more willing to accept a lower house deposit than others.

But there’s a catch.

Typically, if you borrow more than 80% of the property’s value, it’s more than likely you’ll be required to pay for Lenders Mortgage Insurance. This is an insurance designed to protect the lender if you’re unable to make your repayments.

So, when considering your home loan options, it’s worthwhile asking upfront about their lending criteria.

Government incentives – are you eligible?

Understanding what first home buyer’s grants are available in your state is a great way to calculate how much deposit you may need. There are a number of government incentives available in each state which you may be eligible for.

If you’re buying a newly-built home that no one has lived in before – the government’s First Home Buyers Grant is available in each state and territory. Some states also have grants available for existing homes, up to certain price points.

Crunch the numbers

After checking the grants and concessions available, doing some careful calculations is also a good way to get a rough guide as to how much you might be eligible to borrow and how you will repay the loan.

There are many budget calculators and loan guides available to work this out.

 Budget for additional costs

Unfortunately, saving or investing for that deposit doesn’t stop there.  There are a number of additional costs to consider.

Other associated expenses such as, building and pest inspectionssolicitor’s fees and removalists can add up.

Budgeting for these additional expenses as part of your savings or investing plan, may help you to avoid ending up with a house deposit that’s a lot less than what you’d intended.

Stamp duty

Depending on whether you’re eligible for any concessions or exemptions, there is a stamp duty cost which covers changing the property’s title and who it’s owned by.

Each Australian state and territory has its own rules for calculating stamp duty, with some more complex than others. Generally, though, they take into account the amount you pay for the property and the type of property that you’re buying.

Working out how much stamp duty could cost you, is therefore an important step in determining how much you’ll need for a house deposit. Here’s an example of the stamp duty calculator that may help with this.

Conveyancing or legal fees

To prepare the legal documents that’s required for buying or selling a property, a conveyancer or solicitor is usually brought into the process.

Their role is to provide advice on the terms and conditions within the contract that is exchanged between the buyer and seller and make certain enquiries about the property.

On the settlement date, conveyancers or solicitors along with the home loan lender, finalise the finances and the transfer of the property from one owner to another.

Home and contents insurance

If you were to experience any loss or damage to your property, insurance could cover you for this depending on the terms of the policy. This could include things like repairs for an electrical fire or flood.  There are many insurance providers out there.  Ask around and see which one is right for you.

Building inspections

A building inspection is a must and can be really helpful in identifying any structural issues with the property – after all, you want to make sure that what your pouring your life savings into is structurally sound.

 Loan application fee

In some cases, you may be required to pay an upfront fee when you apply for a home loan. You may want to ask about this when speaking with your lender.

 Moving costs

Many people forget about the costs associated with moving, but these are costs that you can’t avoid if you’re intending on living in your new purchase – unless of course, you’ve got a few handy mates with a truck!

 Lenders mortgage insurance

Some lenders may require a lenders mortgage insurance if you have a house deposit of less than a certain percentage (in many instances, 20%) of the property’s value.

Lender’s Mortgage Insurance is a condition of home loan borrowing whereby the borrower is required to make a one-off payment, or regular smaller payments, to protect the lender if they are unable to make repayments.  If this applies to you, you may want to ask about this when speaking with your lender.

Remember that mortgage insurance is about protecting the lender, not you the borrower. As lending tightens it is potentially going to become harder to get so it may be easier to save or invest for a bigger deposit.

Ultimately, how much you need for a house deposit depends on a number of things, based on how much you’re able to borrow and your comfort level with debt.

Bottom line: the more you have, the less you’ll have to borrow.

This article has been prepared by The Brick Exchange Pty Limited (BrickX).  BRICKX is not a financial adviser.  The information in this article is current as at 18/09/18 and is subject to change.  It is intended to provide general information only to assist you in making informed decisions but is not intended to recommend a particular product or strategy as being appropriate for your objectives, needs or circumstances.    You should consider seeking independent legal, financial, taxation or other advice to assess how this information relates to your unique circumstances.  BrickX is not liable for any loss caused from the use of, or reliance on, the information provided.

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