How Much Money Will I Need to Buy a House? - Find It Here!

Calculating your deposit and Lenders Mortgage Insurance (LMI)

The deposit is usually the largest hurdle. In Australia, most lenders require a minimum of 5% to 20% of the property's purchase price. A 20% deposit is ideal because it allows you to avoid Lenders Mortgage Insurance (LMI), a significant, non-refundable premium that protects the lender, not you, if you default.

• Under 20% deposit: You will almost certainly be required to pay LMI, which can add thousands to your loan amount.

• The First Home Owner Grant (FHOG): Many Australian states offer grants that can contribute to your deposit. Eligibility and amounts vary by location (e.g., Sydney vs. regional areas).

• Government schemes: Consider programs like the First Home Guarantee (FHG) or the Regional First Home Buyer Guarantee, which allow eligible first-home buyers to purchase with as little as a 5% deposit without paying LMI.

Calculating the right deposit amount for your situation can be complex, especially when balancing LMI costs and scheme eligibility. HeyNest connects you with a local broker who specializes in finding the sweet spot, ensuring you know the exact deposit amount needed to buy your house while maximizing government support.

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Understanding stamp duty and government fees

Stamp duty or transfer duty, is a mandatory state or territory tax levied on property purchases. It's often the single largest upfront cost after the deposit and it cannot be included in your home loan. The cost is calculated based on:

• The property's value: Higher value means higher stamp duty.

• The property's location: Rates vary significantly between states (e.g., Victoria vs. Queensland).

• Your residency status: Foreign buyers often pay higher rates.

• First home buyer exemptions: Many states offer full or partial stamp duty concessions or exemptions for first-time buyers purchasing properties under a certain price threshold.

Key upfront government fees:

• Land transfer fee: Paid to the state government for legally transferring ownership.

• Mortgage registration fee: Paid to register the lender's interest in the property.

These fees are often overlooked, but they are crucial when determining how much money will I need to buy a house. A HeyNest-connected broker provides a transparent cost breakdown before you even start searching, preventing nasty financial surprises and clarifying any stamp duty concessions you may be eligible for.

Stop Stressing: Why a Broker is the 'Smart, Chill' Way

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Essential settlement costs and ongoing requirements

Beyond the deposit and government taxes, you must budget for necessary professional services required to complete the transaction successfully. These costs are often due at or before settlement and can vary. Common settlement costs:

• Legal fees (conveyancer/solicitor): Typically between $1,000 and $3,000, essential for checking contracts and managing the legal transfer.

• Building and pest inspections: Highly recommended for established properties, typically costing $400 to $800.

• Lender application/valuation fees: Some lenders charge a small fee for processing the application or valuing the property.

• Insurance: You will need to organize building insurance, which is a mandatory requirement from the lender, often needed from the moment contracts are exchanged.

Failing to account for these final costs can lead to significant stress right before settlement. Using a HeyNest broker ensures you have a comprehensive, personalized estimate of all settlement costs. They help you structure your finances so that you can confidently determine the total funds needed to buy your house and reach settlement without a hitch.

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Frequently asked questions

Can I use my superannuation to pay for my deposit?

Yes, through the First Home Super Saver Scheme (FHSSS), you can make voluntary contributions to your super and withdraw them later for a first home deposit.

What is a 'pre-approval' and how does it help?

Pre-approval is a formal indication from a lender of how much they are willing to lend you. It clarifies your borrowing limit and allows you to bid or make offers with confidence.

What is the main benefit of using a broker for calculating the money needed?

A broker provides impartial advice, comparing multiple lenders to find the lowest interest rate and fees, minimizing the overall money you will need to buy a house in the long term.