Australian Home Down Payment
The first thing a lending institution will ask you when you go in for an Australian home loan is the amount of your down payment. Without a down payment you are at risk of being declined by a lot of banks. The economic situation always affects how much of a down payment banks like buyers to have in order to offer a loan. When the economy is poor, having a decent down payment amount shows a bank that you’re serious about buying a home.
Australian real estate experts recommend saving at least 5% of the purchase price for your down payment. However, a down payment of at least 10 to 20 percent helps you get a better interest rate and gives you favorable loan terms. Put simply the more down payment you have the benefit to you is the banks will work with you not against you. Banks like to feel secure with the person they are doing business with and if you can show that you can save then they know that your repayments will come on time all the time.
Creating a Budget
The first thing that will help you in saving for a down payment is a budget. This includes budgeting how and where you spend your money. Start by documenting exactly how much you need for essential bills such as current rent payments, food bills, utility bills, and any other necessary payments. Calculate how much you have left over and what percentage of that you can put away towards your down payment amount.
When creating a budget, one of the areas you need to eliminate is any sort of credit card debt. Banks look at the amount of debt you’re in to determine your loan and interest rate amount. The less debt you have when you apply for a loan, the better your chances of getting the loan you need.
Once you start saving, the next step is to determine exactly how much you need. Online calculators are great at averaging out a monthly payment based on how much you put down. By using one of these calculators, you can determine how much house you can afford.
It may seem counterproductive to start saving before you have a total amount in mind, but as real estate prices change so may the amount you need. By setting aside a set amount each month, you can increase it if possible or determine how long you’ll need to save in order to meet your goal.
Although home buyers used to be able to offer as little as 5%, many banks are leery of lending money to anyone who offers less than 10%, especially first time home buyers. This means that most home buyers will need at least $20,000 in order to qualify for a loan and you’ll want to save closing costs as well. If you’re not sure how much house you can afford but want to start saving for your down payment, use the $20,000 benchmark as a starting goal.
This is bought to you to help you with ideas to buy your new home.
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