First, establish how much you can afford to spend on a new home. Our home loan calculator can give you an idea of how much you might be able to borrow and what your repayments will be. Once you have an idea of how much you can spend on a property, don’t forget to budget for other costs:
- Up-front costs such as stamp duty, legal fees and building and pest inspections, and potentially removalists and re-decorating costs.
- On-going costs such as utility bills, strata fees for apartment owners, council rates, home insurance and contents insurance.
- Learn more about the costs of buying a home.
In general, the more you can save the better. That way you’ll take out a smaller loan (mortgage) and pay back less interest over time. Some banks and other lenders may lend up to 95% of the total value of a property (what’s known as the ‘loan-to-value ratio (LVR’), but ideally you should look to have at least 10% of the value of the property saved as your deposit. Saving 20% is even better, as by doing so you’re likely to avoid paying Lender’s Mortgage Insurance (LMI).
Saving a bigger deposit will also show you’re capable of effective long-term saving and managing your personal finances, which potential lenders will be looking for.