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Breez Forms

How much deposit will I need?

At a minimum, if you have a perfect credit rating, live in a metropolitan area and have personally saved 5% of the property price over a period of at least 3 months you may apply for a loan where you contribute only 5% deposit.  However, you will still need money for stamp duty and other administration costs.

Generally 5%-20% of the property value is a good deposit to aim for as this gives you access to the best home loan products and avoids the high cost of lenders mortgage insurance. 

Lenders Mortgage Insurance (LMI)

Whenever you have less than 20% deposit, you will almost always have to pay mortgage insurance or LMI.  This insurance is a one-off payment by the borrower to the lender (or lender's insurer) to insure the loan.  It insures the lender for any short fall on a loan, so if you were sold up because of defaults, it covers the difference between what you are sold for and the amount still owing.   As mortgage insurance is worked out on a sliding scale, you will need to ask your lender for a quote before you can budget for this cost.   The higher amount you borrow, and/or the less downpayment you make, the higher the LMI becomes.   If you have 20% or more deposit and all other factors are in line, LMI may be paid by the lender.