Most people assume they need 20% saved. Many lenders will accept 10%, some 5%, and eligible first home buyers can use the federal 5% Deposit Scheme to buy with 5% and no LMI. What you can actually do usually surprises people.
Most people buy one or two homes in a lifetime, so the process is unfamiliar to almost everyone who calls us. Here is how it actually works.
Most people believe they need 20% saved before they can buy. On an $800,000 home that is $160,000, which for many households means never.
It is not true. 20% is the point at which you stop paying Lenders Mortgage Insurance, not the amount required to buy. Many lenders will accept 10%, some 5%, and under the federal 5% Deposit Scheme eligible first home buyers can purchase with 5% and no LMI at all.
Whether a smaller deposit is the right choice is a separate question. Buying sooner with LMI can work out better than saving for another three years while prices move, and sometimes it does not. It depends on your numbers. Our guide to deposits and LMI works through it in full.
Stamp duty, conveyancing, building and pest inspections, loan fees and moving costs all sit on top. Depending on your state and whether a first home buyer concession applies, that can range from a few thousand dollars to tens of thousands. We build it into your numbers from the start.
Lenders assess your income, existing debts, living expenses and dependants, then stress-test the loan at roughly 3% above the actual rate to check you could still afford it if rates rose.
That produces a maximum. It is a ceiling, not a target. The more useful question is which repayment still leaves room for the rest of your life. We would rather set you up at a number you can comfortably carry than the largest one a lender will approve.
There is genuine government assistance for first home buyers, and the rules change regularly. It falls broadly into three categories:
Eligibility depends on your income, the property price, where you are buying and whether you have owned before. We confirm which apply to you. Our guide to government schemes covers each in detail.
Pre-approval is a lender confirming in writing, subject to conditions, roughly how much they would lend you. It is not a guarantee, but it does three things: it establishes your real budget, it lets you bid at auction with confidence, and it makes your offer more credible to an agent.
Most pre-approvals last three to six months. If yours lapses while you are still looking, we renew it.
Six steps. You are closely involved in two of them, and kept informed throughout the rest.
We ask where you are at, what you earn, what you owe and what you are hoping to do. Nothing touches your credit file at this stage, and there is no commitment.
About 15 minutesWe establish what you can borrow, the deposit required, which schemes you qualify for and the full upfront costs. You receive it in writing.
Within a day or twoWe select the lender whose policy fits your circumstances, prepare the application and obtain approval subject to a property. This is the only step that touches your credit file, and only with your agreement.
1–2 weeksWe are available when you need a figure checked before you bid, or a second opinion on something an agent has told you.
However long it takesOnce your offer is accepted, the lender values the property and issues formal approval. We follow up the valuer and the paperwork on your behalf.
1–3 weeksYour solicitor and the lender settle, and you collect the keys. We review your rate every year from then on.
Then ongoingNot necessarily. Lenders assess income, debts and expenses very differently from one another - how they treat overtime, bonuses, casual work, HECS or a credit card limit varies enormously. A no from one bank genuinely is not a no from the market. It is worth a second opinion before you give up.
Yes, more than most people expect. Lenders assess the full limit as though it were spent, not your actual balance. A $15,000 card you keep for emergencies can reduce your borrowing capacity by tens of thousands. Reducing or closing the limit before you apply is often the simplest improvement available.
Lenders Mortgage Insurance protects the lender - not you - if you can't repay and the property sells for less than you owe. It's usually charged once, when your deposit is under 20%, and can be added to the loan rather than paid upfront. It is a real cost, and sometimes a sensible one.
Often, yes. A guarantor loan lets a family member offer equity in their own property as additional security, which can remove LMI and let you buy sooner. It is a significant commitment for them, and one we explain to everyone involved on a call rather than by email.
From first call to pre-approval is usually one to two weeks. From an accepted offer to settlement is commonly four to six weeks, though it depends on your contract. The search in between takes as long as it takes.
Our advice costs you nothing. The lender pays us a commission when your loan settles, and the exact amount is disclosed to you in writing before you apply.
Fifteen minutes, no cost, and no obligation to go further.