Embarking on the path to homeownership, you might wonder about the significance of the deposit. Common wisdom suggests aiming for 20%, but with Lending Guide by your side, you’ll understand that this figure is a guideline, not a gatekeeper.
Let’s explore the nuances of deposit size, the role of Lenders Mortgage Insurance (LMI), and how Lending Guide’s top brokers can help you navigate these considerations to make the best choice for your circumstances.
The Significance of a 20% Deposit
This is the ideal position to start, although, given the high price point to get into the Australian property market, most can not afford to start at this point. With a 20% deposit, you will enjoy no LMI cost as the lenders do not charge mortgage insurance at this level, purely because there is little to no risk for the lender to lend 80% of the value of the property. You will enjoy the most competitive interest rates, flexibility and benefits, and of course lower costs overall.
How About If You Have A 10% Deposit?
Despite what’s been drummed into you with the 20% deposit, a starting point of 10% deposit is often the recommended and most common starting position for most reputable brokers. The rates available are very competitive, there are lots of lender options and more customer friendly lender policies available. This is the option to get a good variety of choices and more flexibility and benefits with your loan. This is also the starting position for investment loans, including SMSF – albeit, the SMSF rates are higher at this point (this option is not recommended for most SMSF clients).
Navigating LMI with Smaller Deposits
While a smaller deposit might necessitate LMI, the expert brokers at Lending Guide can demystify this process for you. LMI is often misunderstood; it’s an insurance that protects the lender, not the borrower. However, it also enables buyers to step onto the property ladder sooner.
Our team can help you weigh the pros and cons, ensuring you make an informed decision that aligns with your long-term financial plan. Don’t let not having a 20% deposit stop you fulfilling on your property ownership dream.
Interest Rates and Loan Terms: Navigating a High-Rate Environment
In the current climate of rising interest rates, Lending Guide is your ally in understanding the market. Our top brokers will help you dissect the complexities of securing a mortgage in a high-rate environment and strategise whether to purchase now or save a bit more deposit.
They’ll leave you feeling empowered to make decisions that serve your financial well-being.
Balancing Deposit Size and Timing
The decision of when to buy and how much deposit to save is a significant one. We’re dedicated to helping you strike the right balance, providing expert advice and support every step of the way. Whether you’re ready to buy now or planning to soon, we’re here to ensure your journey to homeownership is a success.
Discover Other Deposit Options
If you don’t have the 20% deposit in hand but are still looking to buy your dream property, don’t worry—there may still be other options available.
