Many first home buyers find saving for the deposit on a home loan to be the toughest part of buying a home in Rockingham, Baldivis, Kwinana and other Perth suburbs. Because of other upfront costs, it takes a deposit of approximately 10% of the home’s price to qualify for a loan with a Loan to Value Ratio of 95%.
Deposit resources
Due to changes in the 2013-14 State Budget, the First Home Owners Grant (FHOG) currently provides $3,000 toward an established home and $10,000 toward a new house and land package. For a home loan on a median established home in Baldivis, 10% of $440,000 would be $44,000. The FHOG would provide $3,000 toward the home.
If, however, you wanted a house and land package, the notional house and land package price is $395,000. If you were to purchase a house and land package, you would need $39,500 and the FHOG would provide $10,000 of this.
The only cautionary note here is that lenders won’t provide a 95% loan on most rural homes. Usually, they only loan between 60% and 80% of the price.
For now, FHOG is the main resource and you will have to save for the loan deposit. A standard “rule of thumb” is to commit yourself to saving 10% of your income every time you get paid. But there are some other ways to find loans that don’t require you to have 10%.
Loans with Less than 10% Deposit
Currently, there are some guarantor loans on the market that will provide the borrower with between 97% and 120% of the price of the house. Also, some lenders will allow you to add upfront costs to the loan, as long as a family member guarantees the loan. Unfortunately, your parents can’t pay your entire down payment for you.
Genuine Savings
Lenders want to see what they call “genuine savings,” which they see as you having saved at least 5% of the deposit over a period of at least three months and they want it to come from your regular income as opposed to lump sums.
Call a Qualified Mortgage Broker
Smartline Mortgage Brokers Rockingham brokers home loans in Rockingham, Baldivis, Kwinana and nearby areas. Call (08) 9527 1800 today.
