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Can I get on the ladder with only 5% downpayment?

So your household is saving $1,800 a month 💰 and you've been doing this for 3 years now. You've got a pot of money in the region of $64,800... A bit of interest from the savings account has brought that up to $70,000. Nice!

But you've spoken to someone at work who said that's not enough money and now you're looking at house prices thinking "this is bloody impossible!" how are we going to save enough to get a good rate, pay LMI and all the other fees associated with buying a property.

Do you keep saving? or do you find a way to jump on!

Let's get one thing clear! House prices aren't crashing 📉 ... so we might as well stop whining about it and figure out a way. They will never come down to a level where you're going to feel like you're "flush" with cash.

So... how do we do it?

Well... if you're eligible for the first home buyer schemes (earning under $120k single or $200k family) then that's LMI waived for you as a first time buyer ❎ sweet!

Depending on your region you may also have stamp duty exemption and/or concession on property as a first time buyer. Also pretty sweet! ✅

Solicitor costs - around $2,500...

Providing you're eligible for the above. That's your deposit payment + solicitor fees. That... is... it... all other fees WAIVED.

$600,000 purchase :- $30,000 + $2,500 = $32,500 with room for movement 😉

But what if you're not eligible? How much do I need?

Maybe you've sold a property years ago so you've waived your first time buyer right for stamp duty, or you earn in excess of the limits to get LMI waiver... what are your options.

Let's look at the same size purchase.

$600,000 purchase (LMI product) :-

Deposit 7% - (2% extra for LMI) - $42,000

Stamp duty (NSW) - $25,000

Solicitor - $2,500

Total - $69,500

or find a lender that uses LMI monthly

$600,000 purchase (LMI monthly product) :-

Deposit - 5% - $30,000

Stamp duty (NSW) - $25,000

Solicitor - $2,500

Total - $57,500

(est. ongoing LMI - $100 per week until property reaches 80% LVR)

As a broker it's my job to present to you the above options. Now with a 5% downpayment, the rates aren't going to be great compared to someone with a 20% deposit. But no one really ever has a 20% deposit for the first one...

So in 2 years time we'll re-value your property alongside the reduced loan amount, as you will have paid some off and work to get an 80% product deal after that period of time. Stopping any LMI payments or future fees and also bringing your interest to a "normal market" level.

A bit of short term pain, for a bit of long term gain. Let's jump into the housing market... 🏠 🔑

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