Getting a Home Loan in Australia if you're living overs...
29 Nov 2023
Ever wondered whether you should hold off from buying a property to save up just that little bit more for your deposit?
Well, as the saying goes “the bigger, the better,” and this can be said for a home loan deposit.
You want to stretch your money as far as possible because a larger deposit will help you when the time comes to apply for a home loan.
Find out why a bigger deposit is better and the tips and tricks you could use to help grow your deposit pot.
As a first homebuyer, there are a lot of things to be excited about, so it’s understandable that you’d want to get into the market as quick as possible. However, this isn’t always the best idea.
While you don’t always need to save a 20% deposit, it can be far better for you now and in the future.
With a larger deposit (generally 20% or more), you can:
Remember, each lender will have different lending rules and standards - make sure you have enough saved up to meet the requirements.
If you’re shy of meeting the 20% deposit, there are government schemes available such as the First Home Owner Grant (FHOG) that you can apply for to boost your deposit.Home loan calculator
To help you see the benefits of having a larger mortgage deposit, consider the following scenario.
If you were to have a 30-year loan term at an interest rate of 4.50% p.a., your monthly repayments would be very different between the 3 scenarios.
Between each scenario, there is over $400 worth of savings per month which shows just how much a bigger deposit can benefit your mortgage repayments.
Along with the benefits already mentioned, here are a few others to consider:
Saving for a deposit can take some time, so here are some tips and tricks you can do to help your pot grow that little bit bigger and faster.
In other words, know where your money is going. By reviewing your spending habits, you can identify areas to cut back on e.g. subscriptions you’ve totally forgotten about. Once you’re familiar with where your money goes, budgeting will be far easier.
Determine how much you can afford to put away each week and stick to it. One way you can do this is by setting up automatic transfers. As soon as your pay arrives, an allocated amount will go straight into your savings account.
This can be done by eliminating luxuries such as buying lunch out or shopping every weekend. You don’t have to stop doing these things completely, but set a limit that is comfortable enough for you, while also seeing a boost in savings.
Take advantage of various grants and concessions available such as the FHOG or Regional First Home Buyer Guarantee. You could add up to an additional $30,000 to your home loan deposit depending on the state you live in.
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