Deposit

What is a deposit?

A deposit is a portion of the full purchase price that a buyer pays upfront to secure something. It serves as a commitment and shows the seller that the buyer is serious about the purchase. The deposit is usually a percentage of the total sale price and is held in trust until the completion of the transaction.

How much does your deposit need to be to buy a property? 

The amount of deposit required to buy a property can greatly vary. In many cases, deposit requirements range anywhere from 5% to 20% of the property's value, but this can depend on factors such as your income and which lender you use. With this said, it is generally recommended to go with a 20% deposit as a deposit less than this amount typically means you’ll have to pay lender’s mortgage insurance (LMI). Essentially, this is a type of insurance that protects the lender/bank in the event that you default on the home loan. 

How can you save up for a house deposit? 

Saving up for a house deposit requires a strategic approach to managing finances. Here are some tips to help you save for a house deposit: 

• Set a budget: establish a budget to track your income and expenses.
• Reduce unnecessary expenses: cut back on non-essential expenses such as dining out, subscription services, or impulse purchases.
• Increase income streams: explore opportunities to boost your income, such as taking on a part-time job or pursuing a side hustle.
• Take advantage of government schemes: Investigate government programs or incentives that support first-home buyers.
• Open a high-interest savings account: Consider using a savings account with a higher interest rate to maximise your savings over time.
• Seek financial advice: consult with a financial advisor to receive personalised guidance on saving for a house deposit and navigating the home-buying process.