The new Loan Deposit Scheme allows eligible first home buyers to secure a loan with a deposit as low as 5%.
The capital city price caps will apply to large regional centres with a population over 250,000, namely:
- The Gold Coast;
- Newcastle and Lake Macquarie;
- The Sunshine Coast;
- Illawarra (Wollongong);
- and Geelong, recognising that dwellings in large regional centres tend to be significantly more expensive than other regional areas.
Example of a $400,000 property and a 5% deposit versus a 20% deposit:
- Property cost = $400,000
- Deposit = $20,000 (5%)
- Loan amount = $380,000
- Interest rate = 4.00% over 30 years
In this scenario your costs are as follows:
- LMI = $12,768
- Monthly repayments = $1,814
- Property cost = $400,000
- Deposit = $80,000 (20%)
- Loan amount = $320,000
- Interest rate = 4.00% over 30 years
In this scenario your costs are as follows:
- LMI = $0
- Monthly repayments = $1,527
If you wanted to save a 20% deposit you’d need an extra $60,000 (but no LMI). This would equal around 33 months of mortgage repayments with a 5% deposit.
But with a 20% deposit your repayments would be noticeably cheaper, at $1,528 a month. That’s $286 a month less.
Skipping the LMI means you buy the property faster and save $12,768 in LMI costs. But you’ll pay $103,122 more in interest costs over 30 years with a 5% deposit.