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What’s the right deposit size for buying a home?

By Andrew Bell

For many Australians, buying their own home is a dream come true and something they work for years to be able to achieve. However, they have to do a lot of financial preparation to make that dream a reality, and that includes saving up enough money for a strong deposit that will simultaneously help them meet goals now and set them up for long-term financial success.

The question, then, is what's the right deposit to make when buying a home? Unfortunately there's no easy answer to this question, because everyone's financial situation and needs are different. However, we do have a few recommendations for how you can proceed toward buying that home of your dreams with confidence.

What's the expectation?

In an ideal scenario, you would come to the table with a deposit of about 20% of your desired home's value. That means if you're looking to buy a home for $500,000, you should have $100,000 in savings, which is a lot of money to put away. Fortunately, Your Mortgage noted that many lenders will let you pay less than that — sometimes as little as 5%.

There's a big difference between putting $25,000 and $100,000 into savings — potentially years of work. But it's worth remembering you will have to pay far more than that difference over the life of the loan, because that means an extra $75,000 accruing interest. Crunch the numbers and see which option is going to work best for you.

Other considerations

Of course, there's more than just the deposit to worry about in terms of the money you will have to bring up front for lenders. Due to things like stamp duty, mortgage insurance and other fees, you could be looking at potentially tens of thousands of dollars in costs above and beyond your initial deposit, and that's something you will certainly also have to account for.

However, according to, there are a number of incentives, for first-time buyers in particular, which could help you find some financial wiggle room as you work toward locking down your ideal home. Talk to lenders to see what options might be available to you based on your unique financial situation, and you might find some extremely beneficial solutions to your financial issues.

Crunch the numbers

Obviously, every single would-be homebuyer is in a different position, and there's no way anyone can recommend exactly what's right for everybody. With that in mind, you will have to sit down and work out how long it will take you to get to a level of confidence you're comfortable with.

Once you estimate how much you'll likely have to pay pay based on your savings, income, potential mortgage rate and so on, you can proceed with more confidence into the process of actually shopping for the right loan, Suncorp advised. That, in turn, will help you know what to expect for your long-term financial planning, and see how buying a home will truly fit into your budget.

It's vital to have a reliable expert by your side during every step of the complex and multifaceted homebuying process, especially if you are brand-new to it. At Ray White Surfers Paradise, we have helped countless first-time homebuyers make all the right decisions and find a property that both met their needs and fit their budgets. Get in touch with us today to learn more about how we can do the same for you.

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