How Much Do I Really Need for a Deposit in Adelaide?
The Basics of a Home Deposit
Most lenders in South Australia require a deposit when you apply to get a loan. The amount of the deposit and its makeup will vary depending on the lender policy, and the amount of loan you apply for. The depsoit itself is made up of the equity required by the band AND the additional funds required to pay the purchase costs like stamp duty and conveyancer fees.
For a loan between 0-80%, you will need to cover a 20% deposit + fees. In SA, purchases costs on an established property come to around 6%, so you would nee 26%. On a $800,000 purchase, this would be $208,000.
Between 80-90%, you will need 10% + fees, and may also need to cover any Lenders Mortgage Insurance (LMI) charged by the bank, which could be around 2-3% of the purchase price. If your lender caps the total loan amount including LMI to 90%, you will need to cover a 12% deposit + fees, or 18% in total. On a $800,000 purchase, this would be $144,000. Under 90%, it is likely that you will not require genuine savings (Savings held or saved over a minimum of 3 months).
Above 90%, lenders will want to see evidence of genuine savings, or proof that you can save or pay off a loan over time (like a rental ledger). Most banks will cap the total lend including any Lenders Mortgage Insurance to 95%, so you would need around 7% + fees, or 13%. On an $800,000 purchase, this would be $104,000.
High LVR lenders like Homestart, Sucasa or OwnHome, or a Guarantee loan could reduce the required depsoit even further. Get in touch to find out what number you should be aiming for, to reach your goal.
Perks when you Build or Buy new
If you're eligible as a First home buyer, you could apply for a stamp duty exemption for land or land + build, which will reduce your stamp duty to $0, reducing the fees payable significantly. You may also be eligible for the $15,000 First Home Owner Grant, which is payable towards your build. Please note that you can't use the Grant as part of your deposit for land only as it is only paid once the slab is poured, or at settlement if you buy off the plan. If you are eligible for both concessions and the Governments 5% Deposit Scheme, your savings deposit required for a $800,000 land and build could be as low as $35,000! You may still need to satisfy a 5% Genuine savings requirement as part of lender policy.
What Counts as Genuine Savings
Genuine savings usually means funds you’ve saved and held in your own account for at least three months. Lenders see this as proof that you can manage your money and afford repayments. You can also use a Rental ledger to help support, and some lenders will accepts a gifted amount as genuine savings if you have had it in your account for 1 month+. Moving money between accounts can complicate whether or not it is genuine, so it's best to quarantine your house fund to a separate savings account, and have that be a one way valve; money in not out.
Low Deposit Options
If saving 20% or even 10%If saving 20% or even 10% feels impossible, don’t worry. There are options like Guarantee loans, Cocktail lending, Lenders Mortgage Insurance (LMI) or government-backed low-deposit schemes that can help you get into the market sooner. I can explain which ones fit your situation.