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.
Case studies: Buying your first home in your 40s and 50s
Originally published 27 January, 2020 8:00:00 AM. Current as at 27 January 2020.