Even though recent reports have shown there are more first home buyers flowing back into the market, it is still quite challenging to get finance if you have less than a 20% deposit. That's not to say it can’t be done, but if you are looking to borrow with less than 20% deposit it can be a lot more difficult & expensive - so why is a 20% deposit more favorable in the eyes of the bank?

It all comes down to risk. If you want to borrow more than 80% of a property’s value you will be up for higher charges as there is more risk involved for the lender. There are also some more hoops you will have to jump through to meet the extra lending criteria.

How can you boost your deposit to 20% without having to wait and save up for it?

One popular way of boosting your deposit is through the bank of Mum & Dad.  Now, this is obviously not a REAL bank but it's one way your parents can help you to get on the property ladder without actually forking out any cold hard cash. We can do this by utilising the equity in your parent's property. Their liability is limited to the amount they are guaranteeing for you. For more detail on how it works check out Westpac’s Family Springboard loan here 

After a couple of years, we can look at how much your property has increased in value and use the gains to pay out your parent's loan!  Can you imagine trying to save $200,000 for a deposit in that amount of time? It would be highly unlikely in today's high inflationary environment!

There are many savings and benefits to having a 20% deposit such as:

✅ NO Low Equity Premium fee - which means you can pay less interest & save on fees

✅ More negotiating power when it comes to getting a discounted interest rate

✅ Save on registered valuation costs - which can be up to $1,200 in some cases!

✅ More cashback options - up to $20,000 depending on your loan size

✅ More borrowing capability - the amount of surplus income required is less!

By going through an experienced Mortgage Adviser you can be rest assured that not only are you getting the very best advice for your situation, but we also make sure to review your loans every year to keep you on track to paying off your mortgage sooner.