Maverick Finance First Home Buyer Case Study 1

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Asian Couple Looking at Laptop In Kitchen

Written by: Maria Papa

How much deposit do our first home buyers need to purchase a $650,000 property? Is their $36,000 savings sufficient to get them into the property market?

Our first home buyer couple have one child. They are both permanent residents in the process of applying for Australian citizenship in February 2020. Male applicant works as a chef in the last 4 years with an annual income of $65,000 plus superannuation on top. Female applicant is on casual work on a full time basis but has only been in her current job for 4 months. They have no credit card or personal loan. They have two fully paid motor vehicles and have genuinely saved $36,000.

Their plan is to purchase a home for $650,000. They know that if they purchase below $650,000, they will qualify for the stamp duty exemption. Upon doing further research, they found out that they cannot qualify for the first home loan deposit scheme because they’re not Australian citizens yet. They are purchasing an established property so this disqualifies them for the first home owners grant of $10,000 in New South Wales.

Scenario for Lender A at 98% Loan to Value Ratio

Purchase price $650,000

Base loan $610,000

LMI is $25,464

Product: Standard variable rate

Total loan is $635,464

Interest rate is 4.87%

Comparison rate is 5.28%

Fortnightly repayment is $1,550

Deposit required: $40,000

In this scenario, they need an additional $4,000 before they can begin the home loan application. 

Scenario for Lender B at 98% Loan to Value Ratio

Purchase price $650,000

Base loan $610,000

LMI is $24,953

Product: Basic Variable Rate Home Loan

Interest rate is 4.16% (variable)

Comparison rate is 4.30%

Fortnightly repayment is $1,426

Deposit required: $40,000

In this scenario, our first home buyers need an additional $4,000 in savings before they can begin the home loan application.

Scenario for Lender C at 95% Loan to Value Ratio

Purchase price $650,000

Base loan $595,000

LMI $22,235

Product: Basic variable with lifetime discount

Interest rate is 3.32%

Comparison rate is 3.33%

Fortnightly repayment is $1,251

Deposit required: $53,000

In this scenario, they need an additional $17,000 more in their account to start the process of applying for a home loan

Scenario for Lender D at 95% Loan to Value Ratio

Purchase price $650,000

Base loan $598,000

LMI $19,349

Product: NAB Choice Package 3 year fixed

Interest rate is 2.98%, comparison rate is 4.26%

Fortnightly repayment is $1,198

Product: NAB Base Home Loan Variable Special

Interest rate is 3.29%

Fortnightly repayment is $1,246

Deposit required: $52,000

In this scenario, they need an additional $16,000 more in their account to start the process of applying for a home loan.

Originally published 27 January, 2020 8:00:00 AM.  Current as at 27 January 2020.

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