You are looking to buy your first home or apartment in Sydney or NSW. What is the absolute minimum deposit required?
In order to have the minimum deposit we need to borrow up to 95% of the value of the property. This requires the payment of a lenders mortgage insurance (LMI) premium. This premium gets worked into the loan and is paid off over the life of the loan.
A minimum deposit will then vary on the purchase price. Here are some examples of what different deposits in NSW can get you:
Note that these figures are for owner-occupier lending and it is assumed that the buyer qualifies for the NSW government stamp duty concessions for first home buyers.
Investment lending is a little more complicated since lenders have varying policies on how much they will lend. Most will only lend to 80% loan-to-value ratios.
Do you have a deposit saved? Contact us to get started with a pre-approval.
APRA recently announced its intention to have lenders remove the 7.25% floor they use for servicing calculations. In a letter to the lenders, APRA state that they plan to remove the servicing floor and allowing lenders to assess on actual repayments plus a buffer, which will allow many people to borrow more. This will loosen the the tightening credit situation in Australia.
What does it really mean?
If you have recently been knocked back on a loan because you were unable to service the loan amount then there is a chance that you will be able to qualify for a loan once this comes into effect. Loans are currently assessed at around 7.25%, meaning that the lender will assess your ability to repay the loan should rates go up to 7.25%. This will be moving to the actual rate +2.5%, so if your home loan rate is around 3.6% then the new assessment rate will be approximately 6.1%. The new assessment rates will have a big impact on borrowing capacity.
Update Aug-2019: This is now in place with lenders.
One thing to note is that it won't help you with your deposit. If you were unable to get a loan because of a lack of deposit then, unfortunately, you need to keep saving.
Contact us and let's see what might be possible under the new system.