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Perhaps the biggest challenge facing potential homebuyers is the issue of how much deposit is required to attain a home loan. There are many misconceptions about how much deposit is actually required, and good Perth mortgage brokers can offer invaluable advice and guidance when it comes to a buyer’s options with regards to this. additional reading
The deposit is one of the most important factors which will determine the success or failure of a home loan application. The amount of deposit that a buyer can put down will impact upon future repayments, amount to be borrowed, and the amount of interest which will be payable over the term of the loan. It will also have a significant impact upon whether loan approval is likely.
Mortgage lenders and banks will have differing criteria governing what monies can be used as a deposit; the more money saved for a deposit, the more likely it is that a mortgage broker will be successful in negotiating the waiving of certain fees, and a lower interest rate on the loan.
As a general rule of thumb, most banks will require a minimum of five percent of the purchase price as deposit, and this must be in what is referred to as “genuine savings”. This is actual money which one has had in a bank account for a period longer than three months, at minimum. This money is used to demonstrate a pattern of savings behaviour.
It is always advisable to have as much money for a deposit as possible (and one must not forget that fees such as stamp duty and legal fees must also be covered over and above the purchase price of the property). The greater deposit paid, the sooner a home loan will be paid off. More equity in the home will be available. Some lenders will even offer a discounted rate for interest when a large deposit is offered.
Persons who are self employed or who have income which is erratic can have a more difficult time gaining a home loan. If one in this situation seeks to borrow more than eighty percent o the value of a property, Lender’s Mortgage Insurance may be necessary in order to be approved for a home loan. This insurance, payable by the borrower, protects the lender in the event that a borrower cannot make repayments and the property does not sell for a price that will cover the loan.
One should always aim to have as much deposit as possible when buying a property – yet in reality, and with the current economy and the expense of daily modern life, this can be very difficult to attain. This is why it is so highly recommended to enlist the services of superior Perth mortgage brokers. These professionals can help a buyer traverse the minefield of loan products and find the perfect loan for each individual’s circumstances.