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Takeaway:
A larger deposit might unlock better home loan rates. It may also improve your chances of mortgage approval. But a home deposit isn't the only cost you'll need to pay upfront when buying a house.
We've outlined how much deposit you'll need for a house and where you might be able to cut costs to save money.
Most lenders require a 20% deposit of the property's value. So for a house worth $800,000, you'll need a deposit of $160,000. The Australian Bureau of Statistics (ABS) estimates that the average home loan deposit is $197,000[@article-abs-house-value].
If you meet all the requirements, you may be able to buy your first home with a minimum deposit. This government incentive allows you to become a home owner sooner. However, a high Loan-to-Value Ratio (LVR) home loan is considered to be higher risk and is subject to LMI.
The risks of this type of low deposit home loan include:
Calculate your borrowing power with our home loan and home deposit calculator.
Besides a home deposit, there are other areas which may need additional funds. Calculations are based on an $800,000 home.
Stamp duty is the tax you pay for purchasing a house. It must be paid within 3 months of the exchange of contracts. It's dependent on a few factors, such as your state or territory, the value of your property, and any exemptions.
If you're a first home buyer, you may qualify for a 50% reduction in stamp duty or be eligible for the First Home Owner Grant.
Stamp duty estimate: $30,000
This licensed professional will assist in the legal process of transferring ownership of a property from the seller to the buyer (you). You may be charged a flat fee or by the hour. Additional surveyor searches may be required, such as:
Learn everything you need to know about solicitors, conveyancing and settlement in 'The Home stretch – getting to settlement!'.
Conveyancer fees estimate: $2,700
A lender may require you to take out LMI if you're unable to provide a 20% deposit of the property's value. The higher your LVR, the more you'll pay for your LMI – from 1% to 5% of your home loan amount. You can save some money by paying the one-off LMI cost upfront. Prefer to tack it on to your home loan? You'll be charged interest on that, too.
LMI estimate, 10% deposit: $14,000 to $21,000
Many mortgage providers will require you to have home insurance before they'll approve your loan application. Home and contents insurance premiums will depend on where you live, the amount of coverage needed, and your excess. Look for online deals and combine your building and contents cover for extra discounts.
Learn more about home and contents insurance
Estimated annual cost: $3,000
When you buy a house, you'll have to pay mortgage registration and transfer fees. Mortgage registration fees are paid when you take out or discharge your home loan. Costs depend on the state and house location, with South Australia's fees being the most expensive out of all the states.
Median average estimate: $850
Charges for moving vary by state. Day of the week, distance between locations and of course, how much stuff you have, will affect the cost of moving house. Movers may charge you by the job, or by the hour.
Estimated moving cost: $1,700
There may also be other costs which should be considered, such as utility bills, strata fees, property repairs, council rates and Internet and phone contracts and connections.
You can factor these into your budget beforehand by doing some basic online research or obtaining a few quotes.
Estimated miscellaneous costs: $600
Think you know how much you need but want to calculate your repayments?
With the average house deposit and extras, you can expect to pay around $215,000 upfront when purchasing an $800,000 property in Australia.
All estimates are based on publicly available information as of the time of publication and are subject to change.
There are several home loan options to choose from, and it's important to find one that suits you based on your circumstances and goals.
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This article is intended to provide general information of an educational nature only. This information should not be relied upon as financial product advice as it does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of the information to your own circumstances and seek independent legal and financial advice prior to making any investment choice. There are risks associated with any investment and this document is not intended to list all of them in respect to any particular investment opportunity. Prices, levels and indications contained in this document are illustrative only and may not represent future performance. HSBC does not warrant or represent the performance of any investment opportunity.
Disclaimer: Credit provided by HSBC Bank Australia ABN 48 006 434 162. AFSL/Australia Credit Licence 232595. Home Loan Terms (PDF), Personal Banking Booklet (PDF), Fees and Charges (PDF), and lending criteria apply. This article does not take into account your personal or financial situation. Please consider a relevant Product Disclosure Statement, available at hsbc.com.au or by calling 1300 308 008 before making a decision about this product.
