The majority of lenders will require you to have saved at least 10 per cent of the property’s value – although some may only require five per cent. This means you’ll need a deposit somewhere between $30,000 and $60,000 if you’re looking to buy a residential property with a value of $600,000
It’s the question on the lips of every first home buyer – how much avocado toast do I need to forgo to buy my first place? And it’s certainly an important question. Sitting down and properly working out how much you can afford will ensure you won’t be blindsided by extra costs you hadn’t considered.
Take for example Alex, a first home buyer who had been saving for a home in Brisbane. Alex had factored into his plans that he’d need a five per cent deposit to buy a home – meaning he’d need $35,000 if he found a place for $700,000. What he soon found, however, was that you need to cover a lot more than just the deposit when it comes to buying property in Australia. Stamp duty, Lender’s Mortgage Insurance (LMI), conveyancing costs – not to mention extra costs for things like pest and building reports if you’re buying a house, all add up and were not factored into Alex’s savings.
As he told us: ‘You probably need to add $20,000 to $30,000 extra on top of a five per cent deposit to actually acquire a house’. This is why it’s important to go over just what you’ll need to buy property in Australia. We’ll also cover the government grants and concessions that are available to first home buyers.
Alex dropped his price criteria back to under $550,000, which made him eligible for a stamp duty concession (Queenslanders can claim a first home concession for stamp duty when buying their first home if the home is valued under $550,000). He was able to buy a gorgeous property 20 minutes from the city in Wynnum.