How much do I need to save for a house deposit?
How much am I able to borrow?
The short answer is nothing - at FHBD, our in-house finance specialists can offer No Deposit and Low Deposit home loan options where no savings are needed, which means you can get into your first home without waiting.
That being said, saving as much as you’re able to can make securing a home loan easier. As a general rule, 5% to 10% of the purchase price is a good target.
Saving a 20% isn’t necessary, but doing so will mean that you avoid having to pay Lenders Mortgage Insurance.
The amount that you’re able to borrow for a home loan depends on a number of different factors and is different from person to person. Click here to visit our loan calculator
What is Lenders Mortgage Insurance?
to find out how much you might be able to borrow.
What is the First Home Owner Grant?
If you’re borrowing 80% or more of the total value of your property, then you’re required to have Lenders Mortgage Insurance.
This is insurance that your lender takes out to protect itself in the event that you default on your loan - however, they pass this cost onto you as the borrower.
Calculated as a percentage of the total value of your home, the closer you get to a 20% deposit, the less you’ll have to pay for your Lenders Mortgage Insurance.
Depending on the type of loan you have, some lenders will allow you to add the cost of this insurance onto your loan so that you don’t have to cover the cost up front.
What other grants can I access?
The First Home Owner Grant is a government scheme designed to help more people get into their first home.
Available to people building a new house as their first home, eligible parties receive a $10,000 cash grant.
This can be used to put towards a deposit or other costs such as stamp duty and lenders mortgage insurance. Want to learn more? Just click here.
What is pre-approval?
Until December 31st, 2021, first home builders in WA can also apply for a number of stimulus package grants. These include:
- The Federal Government’s $25,000 HomeBuilder grant.
- The Western Australian State Government’s $20,000 WA Home Builder Bonus
This means that eligible WA first home buyers can potentially get a staggering $55,000 towards building a new home!
What steps are involved in applying for a home loan?
Pre-approval is a way of helping you to calculate your home loan borrowing capacity. It’s not the same as an actual loan approval (which requires more detailed information to be submitted), but it’s a good indication of whether you’ll be approved for a loan.
To apply for pre-approval you’ll need to supply basic facts about your financial situation, income, living expenses and debt. While it’s not essential, getting pre-approval is a great way to plan for your first home buying experience.
What is the difference between offset and redraw?
While applying for a home loan might seem like a daunting and complicated process, it can be broken down into 5 basic steps:
- Calculating your deposit: first you need to work out when you want to buy your first home, and how much of a deposit that you’re going to be able to save in this time period.
- Calculate your borrowing capacity: using your deposit calculations and other financial information, you can work with various lenders to work out exactly how much you’re able to borrow.
- Choose your mortgage: there are a whole range of loans available, so shop around and choose the best one for your situation.
- Apply for a loan: once you’ve found a mortgage you like, you apply for a loan (this involves submitting information - such as your employment status and financial situation - for the lender to assess).
Formal approval and settlement: if your application is successful the bank will formally approve your loan. You’ll then go through the settlement process before you take ownership of your new home.
What is stamp duty?
Redraw is when you’re able to make additional payments above the minimum amount into your load to reduce your debt (and thus the amount of interest you have to pay). Some loans allow you to access - or redraw - these additional payments at a later date.
Offsets are when you put these additional payments into a separate transaction account. It doesn’t reduce the amount of your loan, but it does reduce the amount of interest you pay (as the amount in your offset account is deducted from your total debt level when calculating your interest payments).
You can access the money in your offset account at any time.
What is conveyancing?
Stamp duty is a government tax that everyone needs to pay when purchasing a house. It’s calculated based on the total value of home being purchased, but it is generally somewhere around the $10,000 mark or above.
The good news is that first home builders in Western Australia are exempt from paying stamp duty!
Conveyancing is the process in which a property is legally transferred from one party to another and part of every home building process.