Key Points on Minimum Down Payment for Buying a House

Importance of Down Payment

• Larger down payment = Better loan deals (lower interest rates, reduced risk for banks).
• Common constraint: Building enough savings for down payment.

Minimum Down Payment Requirement

• Standard minimum deposit: 5% of property value.
• Loan coverage: Banks can lend up to 95% of property value, requiring only 5% from the buyer.

Additional Financial Considerations

• Lenders Mortgage Insurance (LMI):
  • Typically ranges from 3% to 4% of property value.
  • Must be covered by the buyer.
• Stamp Duty:
  • Out-of-pocket expense, no loan available.
  • Ranges from 4% to 5% of property value.
• Other fees:
  • Solicitor fee, building inspection, pest inspection.

Total Savings Required

• Approximately 12% to 13% of property value, including:
  • 5% deposit.
  • 3.5% for LMI.
  • 4% to 5% for Stamp Duty.
• Example for a $1,000,000 property:
  • $120,000 to $130,000 needed in savings.

Government Schemes

• Certain schemes may waive off Stamp Duty and LMI fully or partially.
• Eligibility varies; check for specific benefits for first home buyers.

Conclusion

• More deposit = Better loan terms.
• For more information, contact Infinity Financial.