Calculating your price range
The first step in getting a house deposit together to buy your new home is to know what kind of price range you should be looking at. Knowing your price range will mean you can look at a potential home without worrying if its within your budget.
Check our Affordability Calculator. Itll give you a good idea of the range of property purchase prices that might work for your financial situation.You can also use our repayment calculator to see how interest rate, repayment type and loan term could affect your repayments.
Larger home loan deposit = less to borrow
Once youve found a house that fits your budget, its time to work out what deposit you can put down. A larger deposit means youll need to borrow less, which means youll pay less interest and potentially lower monthly repayments.
Usually, 20% of the full value of the house is a good amount to aim for as a deposit. You can still get a loan if you have a smaller deposit, but you may need to take out Lenders Mortgage Insurance (LMI) which adds an additional cost to your loan. Itll also take longer to pay off.
Most lenders will use a loan to value (LVR) calculation to assess the amount they are willing to lend for a home loan. LVR is the amount of your loan compared to the Banks valuation of your property, expressed as a percentage.
Other upfront costs to consider
Theres more to buying a home than just the cost of the house itself. There are some other upfront costs youll need to know about.
Stamp Duty is a state and territory government tax that can fluctuate depending on things such as location, whether its a first home or an investment, and the price of the property. Its important you take this into consideration when looking to buy a property our Stamp Duty calculator can help give you an idea of how much this may be.
Several legal steps are involved when buying property. Conveyancing (the sale and transfer of real estate) can include a property and title search, the review and exchange of the contract of sale, the transfer of the title, and other aspects too.
Mortgage establishment and registration fees
These can depend on the state in which you live and who your lender is. Knowing whether these apply to you is also important. Find out more about the upfront costs of buying a home
Factors that can affect your loan and interest rate
Now you know your price range, how much you need for your deposit, and the other potential upfront costs. In addition to these, there are a few other factors that may affect the amount a lender is willing to loan you and the interest rate they might charge.
Your credit report and score helps lenders assess your ability to repay and manage credit, which can affect the size of the loan and the interest rate. A higher credit score can see larger loans at lower rates, while a lower score might see the opposite.
Having a savings plan to help accumulate your deposit is a good way to show you can meet home loan repayments also, make sure youre making regular repayments on credit cards or other credit products you have, to help increase your credit score.