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How much do I need to buy a house?

Buying a home is a huge step. Most people have an idea of what type of house they want to buy, but they might not have as clear an idea of all the costs involved in purchasing a property and how much you'll need to pay upfront. Here we break down everything you'll need to know.

#1. How much can I afford to repay each month?

This is an important question because it informs how much you can borrow. In order to be approved for a home loan, lenders want to know that you have a steady income and the means to repay the loan in full. If you're already paying rent, you can put this money towards your home loan repayments.

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#2. How much will my house cost?

The purchase price can depend on a number of factors including the area the property is situated, and how close it is to facilities such as public transport, good schools and hospitals. Typically, the better the neighbourhood the more expensive it is to buy into since there is a lot more competition.

Got your eye on a particular property? Use our free property report.

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#3. How much deposit do I need?

Borrowers typically aim to save a deposit of at least 20% of the property purchase price, however, this is not a realistic option for many first home buyers. This target of 20% is set by lenders who view anyone with a low deposit as higher risk. As a result, many lenders charge borrowers with a low deposit Lenders Mortage Insurance (LMI).

However, it's not all bleak. There are a lot of low deposit home loan options available and, for a lot of first home buyers, this is the only way they can get a foothold on the property ladder while prices continue to climb.

Will you need to pay LMI?

See how much you might need to pay if you're low on a deposit.

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Low on a deposit? We could have the home loan for you.

#4. Will I need to pay stamp duty?

Stamp duty is a one-off government fee that you may need to pay when you purchase land or property. However, there are government concessions and exceptions available that you may be able to use, which vary in each state and territory.

For example, in NSW, the First Home Buyers Assistance Scheme allows first timers exemption from paying stamp duty for properties valued up to $650,000.

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Find out how much stamp duty you might need to pay.

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Check out our guide to stamp duty for more information.

#5. Are there hidden costs?

When you purchase a property, the deposit isn’t the only cash you’ll hand over. You’ll also need to set aside funds to pay for stamp duty, pest and building inspections, legal and conveyancing fees, council fees, and possibly Lenders Mortgage Insurance.

One extra fee many people don’t know about is that lenders charge a fee to set up a home loan and that can be as much as a $1,000. However, some lenders will waive this fee - Lendi’s Home Loan Specialists can help you with this.

Learn more about the hidden costs of buying a property here.

#6. What is my borrowing power?

Borrowing power refers to how much you will be able to borrow from a lender. Your borrowing power will depend on a number of factors including your lender's policy, your credit history, your income and financial situation.

Wondering how much you could borrow?

Calculate your borrowing power based on your income.

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Calculate your borrowing power with our borrowing power calculator

#7. What about my credit rating?

Your lender will always conduct a credit check during the home loan approval process. Your credit rating indicates how much of a risk you are in regards to your ability to repay your home loan.

Try to pay off any existing debts so to present less of a risk and therefore, possibly reduce the interest rate you'll be offered. A stable income and employment history will also help your chances of home loan approval.

Got home loan questions?

Speak to a Lendi Home Loan Specialist today for free expert advice.

Tags: stamp duty, borrowing power, deposit, conditional approval, formal approval, pre approval

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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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