If you are not a first home buyer or live in a state like Victoria or South Australia where government stamp duty amounts to 4-5%, then just having the 5% deposit that some banks require is not going to be enough to get you into your next property.
For example, if you are purchasing a property in Victoria for $400,000 as a first home buyer and have saved $20,000 as your 5% deposit, the figures look like this;
5% deposit: $20,000
Stamp duty: $14,307
Misc costs for legals etc: $2000
Total funds required: $36,307
Less First Home Owners Grant: -$7,000
Total own cash required: $29,307
If you have saved up the $20,000 then you are still some $9,000 short on being able to buy your first home in victoria.
This article briefly explains a couple of options for this scenario.
Option 1: $20,000 Extra on Settlement
MAP has options where lenders will provide/fund an extra $20,000 on settlement to assist with costs like stamp duty, legals etc. This $20,000 is at home loan rates. The key for this loan is that you have 5% genuine savings as your deposit and providing you do, then the lender is prepared to give you $20,000 to assist with the purchasing costs. This is a great option and in some cases would mean that you could borrow 100% and keep your 5% deposit in your bank account to perhaps pay off credit cards, personal loans or other debts.
Option 2: No Requirement for Genuine Savings
There is no requirement that you have to save up the funds to pay for stamp duty and costs. Therefore, you could use a gift, tax return or even a small personal loan to cover these purchasing costs. It is ok to use a personal loan as funds to complete the purchase providing this is fully disclosed to the lender and you can afford both repayments.
More information on No Genuine Savings Home Loan here.
Option 3: Use a Guarantor
If you have mum and dad who own property and will go guarantor, then this is a great way to be able to use your deposit to pay for the fees and charges. In fact, if you have a guarantor there is no requirement for a deposit at all and the bank will provide 100% of the purchase price plus enough for purchasing costs like stamp duty and legals.
Conclusion:
So if you have the 5% deposit but do not have enough for purchasing costs, or would like to consolidate some debt so you only have the one home loan repayment at home loan interest rates, option 1 and 3 will see you achieve this and into your home and out of the rent trap sooner.
KarynMAP home loans were referred to me by my Financial Advisor. I was looking to purchase my forever home as I transition to retirement. It was a long shot that I would be able to purchase another home but with the help of Justin at MAP Home Loans this become a reality. I would recommend contacting Justin for your home loan needs.
Grant VolrathI was referred to MAP Home Loans through a 3rd party and can say that I was very well satisfied. Justin never missed any communication and seemed to go above and beyond to help us with our loan. Not only that but the care before and after along with guidance he got us a couple government grants too. Absolutely fantastic Job and will definitely be passing on his information to any friends and peers.
CatiaA huge thank you to Justin for his outstanding service! Finding the perfect place was no easy task and it took a while, but Justin’s support made all the difference. He was always available, providing expert advice and guidance every step of the way. He ensured that I was prepared for the application process, leading to a smooth and successful outcome. I couldn’t have asked for a better experience, and I wholeheartedly recommend Justin. Thanks for helping with this important milestone for me and my little family.
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