The bigger the better. Ideally, you will
have about 20 percent of the house purchase price saved up.
This is a good idea for a couple of reasons.
Firstly, it will take a while to save
that much, so you’ll have an extensive and solid savings history to demonstrate
to the lender.
Secondly, it will mean that you avoid
Lenders’ Mortgage Insurance, a cost-saving of many thousands of dollars.
In reality, it is uncommon for first home
buyers to have a 20 percent deposit saved.
The minimum deposit is five percent, but
if you only have a small deposit the bank will take a very close look at all
the other factors, such as job stability and security, spending habits, and
fixed expenses as well as your credit history.
It would be wise to have about 10 per
This would give you the best chances of a
smooth approval process.
Just a quick note on being gifted your
deposit by a parent or other close relative – the deposit serves as a
demonstration of savings success.
If you don’t have a solid history of
savings and are presenting a deposit that was gifted to you, the lender may
need additional proof of being able to meet regular financial commitments.
A three-to-six-month record of rental
payments may suffice but be aware that some lenders will not consider loan
applications where the deposit is gifted to the applicant.
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Tuesday, 22 June 2021