How Much of a Deposit do I need as a First Home Buyer?
by
Complete by McDonald Jones

Owning your first home should always be a reachable goal rather than a pipe dream. Here at Complete by McDonald Jones, we understand that the journey to homeownership can sometimes feel a bit overwhelming, especially when it comes to understanding deposits. That's why we're here to help.

This guide is designed to simplify the process and give you a clear understanding of what you need to know about deposits, loans, and LMI. We’ll walk you through everything, from saving for your deposit to choosing the right loan type.

Securing your First Home Loan

Saving for your first home can feel like a big undertaking, but with the right approach and the right support, you can absolutely achieve it. Let's break down the key steps to securing your first home loan: 

To put it simply, the more you save, the better. It’s a good idea to start by getting a clear picture of your finances. Chatting to our friends at MyChoice Home Loans they recommend tracking your spending, identifying areas where you can save, and setting a realistic savings goal. After all, every little bit counts!

Choosing the Right Loan

There are two main types of home loans:

  • Fixed-Rate Loans: These offer stability with a consistent interest rate for a set period, usually one to five years. This can be great for budgeting, as your repayments will remain the same.

  • Variable-Rate Loans: These have interest rates that fluctuate based on market conditions. While they might offer lower initial rates, your repayments could increase over time.

Choosing the right loan will depend on your circumstances and financial goals.

Pre-Approval

Getting pre-approved for a home loan has many benefits and should be an option you consider. It gives you a clear understanding of how much you can borrow, making your property search much more focused. It also shows sellers that you're a serious buyer, giving you an edge in a competitive market.

Government Assistance for First Home Buyers

Thankfully, the New South Wales government offers helpful schemes for first-time buyers. Depending on your circumstances, the First Home Buyers Assistance scheme may allow you to receive reduced stamp duty costs.

How does it work? If you buy a new or existing home valued at up to $800,000, the scheme will help you receive full exemption from stamp duty. You can also receive a concessional rate for homes valued at over $800,000 but less than $1,000,000.

We recommend visiting Revenue NSW’s website, which provides all the necessary information on eligibility and thresholds.

Partnering with MyChoice Home Loans

At Complete by McDonald Jones, we understand that navigating the financial side of home buying can be tricky. That’s why we work exclusively with MyChoice Home Loans. Their mortgage brokers can help you:

  • Compare Loan Products: Find the best loan options from a range of lenders.

  • Negotiate Interest Rates: Secure competitive interest rates and loan terms.

  • Guide You Through the Process: Provide support throughout the entire loan application process.

By working with MyChoice Home Loans, you can gain valuable insights, make informed decisions, and secure the right finance for your new Complete by McDonald Jones home. They can help you understand the eligibility criteria and application process for any relevant government grants and help you secure the best possible loan based on your personal circumstances.

Securing the right finances is an important step toward owning your first home. With careful planning, smart saving, and the support of expert professionals like MyChoice Home Loans, you can confidently navigate the process and achieve your homeownership goals.

Lenders Mortgage Insurance (LMI)

So, what happens if you don't have that traditional 20% deposit? That's where Lender's Mortgage Insurance, or LMI, comes in. Essentially, LMI is a one-off insurance premium that protects the lender, not you, if you can't repay your loan and they have to sell your property for less than what you owe. Think of it as a safety net for the bank.

Why is LMI helpful?

It makes homeownership more accessible for those who haven't quite reached the 20% savings mark. With Complete by McDonald Jones, you can often secure a house and land package with a much smaller deposit, sometimes as low as $15,000! Many lenders offer finance options with smaller deposits, and LMI can bridge the gap.

Is there a catch?

As much as LMI is helpful, it isn't a free pass. It's an added cost to your loan, so it's essential to weigh the pros and cons carefully. It might not be the best option for everyone. You’ll be taking on a higher level of debt, so it's important to assess whether or not depositing less than 20% is beneficial for owning your home as soon as possible. Waiting to be in a position to deposit over the 20% benchmark may be a more viable financial option in the long run, depending on the circumstances.

Navigating the world of deposits and home loans can feel overwhelming, but it doesn't have to be. With Complete by McDonald Jones, we make the process simple and straightforward. Our house and land packages offer a fantastic way to get into your first home with ease.

With our buy now, pay later approach, you only need an initial deposit, and then you don't pay again until you get your keys! Plus, the team at MyChoice Home Loans are here to help you find the perfect loan for your situation.

Ready to take the next step? Contact us today to learn more about our house and land packages and how we can help you achieve homeownership.