Questions a Lender Will Ask You and What You Should Prepare For - What deposit do you have?

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 cent saved.

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.

RealRenta has all the tools that a property manager has, but at over ¼ the cost of a property manager.

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Jason Gwerder
Tuesday, 22 June 2021

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