How much deposit do you need for a $650,000 mortgage?
To avoid needing to pay for lender’s mortgage insurance (LMI) on a $650,000 loan, you would need a home deposit (or equity in your existing property) of at least $162,500. In other words, that would be the amount required for your loan-to-value ratio (LVR) to be 80%, which is the maximum for most lenders before LMI applies.
But you may still be approved for a home loan with a deposit of as little as 5% (LVR of 95%) if you agree to pay for LMI to protect the lender, or apply as part of the government’s Home Guarantee Scheme (HGS).
Remember, you should budget for other home-buying costs like stamp duty and conveyancing fees separately to your deposit.
Can I afford a $300,000 mortgage?
This will depend on your income, deposit and loan term. A guide given by some banks is that you shouldn't spend more than 30% of your after-tax household income on mortgage payments or housing costs.
Based on that 30% guide, on a $650,000 home loan with a 30-year term at 6.09% interest, you would need a monthly household income (after tax) of at least $13,115.9 to comfortably afford the home loan repayment of $3,934.77.
Before you commit to a mortgage of any size, make you understand all the costs associated with it, including:
1
Interest
This is the cost of borrowing money, paid over the life of the loan.
2
Lender’s mortgage insurance (LMI)
If your deposit is less than 20%, you may have to pay LMI to protect the lender in case of default.
3
Home loan fees
Fees charged by the lender to set up and manage your home loan.
4
Stamp duty (if applicable)
A state government tax on property purchases.
5
Conveyancing fees
Costs of legal work involved in buying a home, including title searches and property transfers.
