vitchie Posted January 16, 2018 Report Share Posted January 16, 2018 Hi all I'm interested to know how many folks here have bought with a deposit less than 20%? I have generally assumed that I will only be able to buy once I have saved a 20% deposit. This is made me become quite despondent as that will take many many years. I have been investigating land & house packages closer to Brisbane and the Gold Coast and see if I save just a few more months here in Sydney we should be able to have 10% for a deposit for a place up there. I don't mind moving up there and taking a pay-cut once the deposit is covered. Can anybody comment from personal experience from buying property and dealing with the banks? Is it only in rare cases that they approve less than 20% deposit mortgages? Quote Link to comment Share on other sites More sharing options...
ChrisH Posted January 16, 2018 Report Share Posted January 16, 2018 As far as I know, the 20% deposit comes from some additional insurance you are forced to take out (like shortfall insurance). I've heard of people getting finance with less deposit. Quote Link to comment Share on other sites More sharing options...
Jacques Voogt Posted January 16, 2018 Report Share Posted January 16, 2018 Lenders will give up to 95% loans with LMI (Lenders Mortgage Insurance) to cover the lender in the event that you default and they have to sell it at 80% of value on auction. It is expensive, and they usually want it upfront, decreasing your deposit even further and increasing the shortfall further. Some lenders will allow you to finance that. So you pay it off over 30 years. But you can not pay extra into your loan to bring the owing amount below 80% and expect them to waive the insurance. IMHO at this point it is no longer justified. So it is a bit of a money grab from those who can afford it the least. Most banks have some info on their sites. This is just one:https://www.nab.com.au/personal/learn/buying-your-first-home/lenders-mortgage-insurance Calculators: https://www.yourmortgage.com.au/calculators/mortgage_insurance/ https://www.homeloanexperts.com.au/lenders-mortgage-insurance/lmi-calculator/ 1 Quote Link to comment Share on other sites More sharing options...
RedPanda Posted January 22, 2018 Report Share Posted January 22, 2018 Yup, @Jacques Voogt has pretty much summed it up. Unfortunately. LMI eats into the deposit you thought you had. I would recommend making an appointment with several banks or financial institutions and asking them to run the numbers for you. They were all patient with us, and explained it in detail. I don't have advice for you, because I know the property market is going up at a faster rate than most people can save. Quote Link to comment Share on other sites More sharing options...
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