Owning a home is a dream for many, but not everyone has a substantial deposit to put towards it.
If you're wondering if you can buy a house with a $20,000 deposit in Western Australia, the short answer is, yes - it's possible.
But, let's dive deeper into this topic and find out how much deposit you really need, what to do if you have less, and what other costs to take into account.
Is $20,000 enough deposit to buy a house?
While there is no set deposit amount that you need to buy a house, $20,000 is a decent chunk of change that can put you on the right track towards home ownership.
The amount of deposit required often depends on several factors like the property's value, your credit score, the type of construction loan you chose and the lender you choose.
But, in general, a $20,000 deposit would cover at least 5% of a $400,000 property, which is the absolute minimum deposit required by most lenders.
How much deposit do I need for a home loan?
Most lenders require a 20% deposit to avoid paying Lenders Mortgage Insurance (LMI), which can be a significant added expense.
Some lenders may offer loans with 5% or 10% deposits, but these often come with higher interest rates.
It's essential to do your research and compare interest rates, fees, and loan terms from different lenders to find the most suitable option.
We recommend you speak to your mortgage broker as they have access to multiple lenders and are able to look for the best deal while taking your individual situation into account.
What if I have less than the recommended deposit?
If you have less than the recommended deposit, you may still be able to secure a home loan. Some lenders offer loans with as little as a 2% deposit, but these arrangements usually come with LMI fees.
If you're struggling to come up with the recommended deposit, there may be government grants available to assist you. Keep reading to find out more.
What if I don’t have a deposit at all?
If you don't have a deposit at all, it may be possible to borrow money from a family member, but this arrangement can come with risks.
You may also want to consider saving for a few more months, or even years, to build up your deposit or look into government grants for first-time homebuyers.
Can I have a family member go as a Guarantor?
Yes, you can. If you have a family member willing to go guarantor for you, this can help you secure a home loan with a lower deposit.
A guarantor is someone who agrees to take on your loan if you default on repayments.
But, keep in mind that going guarantor comes with risks, so make sure you're comfortable with this arrangement before proceeding.
Are there any other costs when buying a property that I should take into account?
Yes, there are several other costs that you should take into account when buying a property.
These include stamp duty, which is a tax on property transactions, conveyancing fees, building and pest inspections, and moving costs.
Make sure you factor these costs into your budget so that you're not caught off guard.
Are there any government grants for first home buyers in Western Australia?
Yes, there are several government grants available for first-time homebuyers in Western Australia, such as the First Home Owner Grant (FHOG), Keystart Loans, and stamp duty exemptions.
These grants can assist you in saving for a deposit, and make homeownership more accessible.
Make sure you research and take advantage of these grants if you're eligible.
Buying a house with a $20,000 deposit in Western Australia is possible.
However, it's essential to do your research, compare lenders, and take advantage of available grants to ensure you're getting the best deal possible.
With the right preparation and planning, you can make your dream of homeownership a reality.