How much do I need to save to take out a mortgage?

Any general questions you might have in regards to loans and finance.
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moodyjack
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Joined: Wed Jun 17, 2009 4:36 pm

How much do I need to save to take out a mortgage?

Post by moodyjack »

Hello,

I work as a manager at a coffee shop in Elizabeth Street, Melbourne. Most of the business happens in the morning, so I need to get to the coffee shop as early as possible. The problem is that I’m currently renting an apartment which is a half an hour drive away from the shop. My car is not always reliable so it has become very hard for me to make the commute every day.

Anyway, I’m planning on buying a house near the coffee shop. The house is valued at $400,000. At the moment, I have only $20,000 which I can use. Can anyone here tell me how much I need to save to get a home loan ?

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Otto Dargan
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Re: How much do I need to save to take out a mortgage?

Post by Otto Dargan »

Hi and welcome to the forums moodyjack.

Generally, lenders require you to save up at least 5%-10% of the purchase price of the property as a deposit.

In your case, you are purchasing a property worth $400,000. You may be required to put down a deposit of at least $20,000 to get a loan. However, it may not be enough because you may need to pay for some additional costs involved in the purchase.

The costs may include conveyancing fees and stamp duties, which may add up to another 5% of the purchase price, i.e. another $20,000.

Cheers,
Otto
Otto Dargan
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P | 1300 889 743
Home Loan Experts

moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Re: How much do I need to save to take out a mortgage?

Post by moodyjack »

That means if I can save another $20,000, then I can afford to buy the house. I’m so glad to hear that. Can you give me some tips on saving a deposit?

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Otto Dargan
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Re: How much do I need to save to take out a mortgage?

Post by Otto Dargan »

Hi moodyjack,

Here are some techniques that you can follow to build your savings:
  • Have an end goal: Have short, medium term, and long term goals in your mind. Regularly review your progress to know where you stand.
  • Have a plan and a timeframe in mind: You may estimate how much you can realistically save on a regular basis. Based on that, you may create a time frame to reach your savings goal.
  • Save more, progressively: You may start off your savings small and then increase it gradually. It may be more convenient for you to do this instead of trying to save a huge amount of money at once.
It is recommended that you do not stretch your finances to take out a mortgage. You must be able to afford the loan comfortably. To find if you can actually afford the loan, you can use our How Much Can I Borrow Calculator.

It should be noted that the calculator must be used as a guide only.

You can learn more about all of this by having a look at our website. You can also give us a call on 1300 889 743 to discuss this with one of our expert brokers, or for a complete assessment of your situation, you can fill in our free assessment form.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Re: How much do I need to save to take out a mortgage?

Post by moodyjack »

I’m not much of a tech guy but the calculator is very easy to use and understand. The calculator thinks I can afford the loan. :) That is good to know. I’ll just concentrate on saving up for now. I’ll give you a call after a few months. Cheers, mate!

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fisher
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Re: How much do I need to save to take out a mortgage?

Post by fisher »

Hello home loan experts,

I was going through this thread because I wanted to find out how much I needed to save for a deposit. I learnt a lot through this thread. Thank you!

I’ve heard from a friend that I may have to pay a considerable amount on LMI to take out a mortgage. Is there any way to get a discount on that?

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Otto Dargan
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Re: How much do I need to save to take out a mortgage?

Post by Otto Dargan »

Hi fisher,

It may be possible for you to get a discount on LMI premium only if you meet certain requirements. Typically, you should:
  • Be buying a property and not refinancing it.
  • Have saved up at least 5% as genuine savings.
  • Be borrowing less than 95% of property value.
  • Have been working in the same place for at least two years.
  • Not have any credit defaults or adverse listings.
  • Be borrowing less than $800,000.
  • Be buying a house in a capital city or major regional centre.
It should be noted that if you are borrowing less than 80% of the purchase price of the property then you do not have to pay LMI. You may also be able to get your LMI fee waived if you are a doctor, accountant, engineer, or lawyer.

You can give us a call if you want to learn more.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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fisher
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Re: How much do I need to save to take out a mortgage?

Post by fisher »

Thanks for the quick reply, Otto! I want to know a little more about LMI and would also like to discuss my situation with you guys. I live just 10 minutes away from your office. I’ll give you guys a visit sometime next week. Good day, mate!

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