Buying a property? The bigger your deposit, the better your options.
If you're thinking of buying property, bear in mind that the total costs will probably end up to being more than just the property price. Even after you’ve allowed for your deposit, you'll need to take all your upfront costs into account, like your stamp duty and legal fees. (Our Home Loan Fee Calculator can provide an indication of these figures.) So it's important to focus on saving as much as you can.
Set a goal
Start thinking about how much you’ll need to save, and how soon you’d like to get that property. If you’re eligible for a First Home Owner Grant, that money could help.
For a more detailed estimate of your buying power, use The ANZ Home Loan Calculator. Bear in mind that most lenders generally ask that your deposit be at least 20% of the property price, if you want to avoid paying Lenders Mortgage Insurance (LMI)disclaimer.
Once you've set your savings goal, ANZ has tools and calculators to help with your savings plan.
Set your budget
Now that you've worked out how much you need to put away in order to reach your savings goal, it's time to plan your budget and stick to it. Think about making regular savings from your wages. Look into cutting expenses and saving on unnecessary items. Never underestimate the power of cutting costs, no matter how insignificant they seem. Small savings can add up to large amounts over time.
The ANZ budget planner may be useful, helping you add up all of your earnings and expenses to give you an estimate of how much money you may have left at the end of your selected time period.
Make regular deposits into a savings account
Consider saving money by making regular deposits into an account that pays interest. If you’re serious about saving for a goal and don’t need regular access to that money, you can consider an ANZ Progress Saver account. And if you need access to your savings, consider an ANZ Online Saver account instead.
Reduce your debts
If you have existing debts, it's important to assess and come up with a plan to reduce these debts with regular weekly or fortnightly payments. Interest rates on some loans can be higher than a typical home loan, so it may be a good idea to identify these debts and pay them off first.
Don't have enough saved? There are other options to help you buy your property.
Lenders Mortgage Insurance (LMI)disclaimer
If you need to borrow more than 80% of the amount your property is valued at, you may need to pay Lenders Mortgage Insurance (LMI). For some property types, LMI might be required when LVR is less than 80%. Banks often call this percentage the 'LVR', which stands for 'Loan to Value Ratio'. LMI protects lenders against a loss if a borrower can no longer afford their loan repayments. This one-off fee is based on several factors including the loan amount and LVR.
If the property has to be sold, LMI can cover the lender if the sale price of the property does not cover the outstanding loan balance plus claimable costsdisclaimer. It's important to note that LMI covers the lender, not the borrower.
ANZ Security Guarantee
An ANZ Security Guarantee could allow a family member to use all or part of the equity in their home as additional security for a part of your loan amount. This guarantee could help reduce your LVR to less than 80%, and save you from having to pay LMI if you have a guarantor who agrees to accept the obligations associated with entering into a guarantee. But it’s important to remember that if for some reason you default on your loan, ANZ can seek to recover from your guarantor. Agreeing to being a guarantor is a very important decision.
ANZ Deposit Bond
An ANZ Deposit Bond can take the place of all or part of the 10% cash deposit usually required upfront when you purchase a residential property. It could be an option for home buyers who have funds tied up in investments or in their home, and need to provide a deposit. Please refer to the ANZ Deposit Bond brochure (PDF 141kB) for further details.
Buy property with someone elsedisclaimer
Some people team up with family members or even close friends to pool resources and help get the property they want. It's important to note that buyers who share ownership like this generally have a strong agreement prepared in case of issues such as:
- income and other expenses
- whether one party can buy the other out
- what happens if someone wants to sell but the other doesn't
If you're considering sharing ownership of a property, it may be a good idea to get the right legal and financial advice first.