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How much deposit do you really need?

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How much deposit do you really need?

Many first home buyers have been put off attempting to buy a home due to the negative nonsense in the media stating – incorrectly in my view – that it is impossible to buy a house in this environment. But what many people do not realise, it is well within their capabilities, particularly while interest rates are so low. Australia’s official interest rate remains near historic lows and the latest economic data encourages the Reserve Bank to maintain its recent conservative approach to rate settings. Recently CBA has downgraded their forecast that interest rates will rise in 2018 from twice to none.
So how much deposit can you use?
The rules around borrowing, particularly for first home buyers, include the following interesting facts:
you only need 5% genuine savings in your savings account for three months; or
a letter from a parent/s stating they are giving you the cash deposit and it is non-refundable; and/or
you have been renting for 6 months and can show regular payments to a real estate agent from your bank account.

So how much does this really mean?
At the moment in several states in Australia, first home buyers purchasing a property around $600,000 will not pay stamp duty, so if you wanted to buy a house worth $300,000, you need $15,000 deposit plus a few extra thousand for costs. And a house worth $500,000, you need $25,000.
Most first home buyers I meet have managed very successfully to save these amounts without asking their parents. The problem is not that they can’t save, it is that they think it won’t help them actually buy, but this is a real mistake.  It is absolutely vital to get started as early as possible and anyone buying under $500,000 today won’t feel anything but joy over this purchase in 10-15 years time.
So if you want to get started, please let us give you some guidance around how to manage your accounts, what lenders are looking for and how to present yourself in the right light to lenders.
We also offer a lot of support in the actual buying process and both Ralph Nicholson, who has over 30 years experience in buying and selling property, and myself are here to help you. Please do not hesitate to call.

With thanks,

 
 


Quote of the Day:

“The future depends on what you do today”.
Mahatma Gandhi